Canada’s housing rebound continued in January. What should buyers expect this spring?

Houses for sale in Ottawa

January marked the second straight month of higher home sales in Canada, which are now up 22% from a year ago.

Economists are attributing the increased sales activity to favourable weather in many parts of the country and improving buyer sentiment at the prospect of Bank of Canada rate cuts later this year.

Home sales in January were up 3.7% from December, which follows December’s 7.9% month-over-month gain, according to data from the Canadian Real Estate Association (CREA). Despite the gains, however, CREA noted that sales activity remains roughly 9% below the 10-year average.

Sales were up most in Ontario (+6.9% month-over-month), British Columbia (+4.5%) and Quebec (+4.3%), while Saskatchewan saw the largest decline of -4.9%.

“Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers,” noted CREA senior economist Shaun Cathcart.

“However, in areas where sales have shot up most over the last two months, prices are still trending lower,” he added. “Taken together, these trends suggest a market that is starting to turn a corner but is still working through the weakness of the last two years.”

While remaining stable, home prices aren’t showing the same kind of strength as sales. The MLS Home Price Index (HPI), which adjusts for seasonality, fell 1.2% month-over-month and is up just 0.4% from a year ago.

The not seasonally adjusted average national home price is up 7.6% from January 2023 to $659,395.

Sales once again outpaced new listings, causing the sales-to-new listings ratio to rise to 58.8%. That’s up from 50% just three months ago, but remains well below its 10-year average of 61%.

Months of inventory also tightened for the second straight month to 3.7 months in January, down from 5.8 months in December and a high of 4.2 months in November.

Too early to tell what the spring market will look like

Economists say it’s too early to tell if the rise in activity over the last two months is part of a larger trend that will carry over to the spring.

“With it being a low volume sales month, some caution is normally warranted when interpreting the results,” cautioned TD economist Rishi Sondhi.

Marc Desormeaux, principal economist at Desjardins, said it’s too soon to assume a return to “frothy market conditions” is imminent. He points to bond yields—which lead fixed mortgage rates—having risen by at least 50 basis points since early January on market expectations that Bank of Canada rate cuts will be pushed to later in the year.

“Moreover, January sales figures tend to be subject to abnormally large seasonal adjustments,” he wrote. “That said, January 2024 increases were strong enough to bring sales back to within pre-pandemic seasonal norms.”

But with the country’s labour market expected to continue feeling the impacts of high interest rates, housing demand could weaken over the coming months, Desormeaux said.

Cross-country roundup of home prices

Here’s a look at select provincial and municipal average house prices as of January.

Location January 2023 January 2024 Annual price change
B.C. $866,876 $960,433 +10.8%
Ontario $798,624 $821,624 +2.9%
Quebec $450,368 $492,735 +9.4%
Alberta $419,912 $471,887 +12.4%
Manitoba $319,305 $351,305 +10%
New Brunswick $264,400 $283,700 +7.3%
Greater Vancouver $1,114,800 $1,161,300 +4.2%
Greater Toronto $1,070,600 $1,065,800 -0.4%
Victoria $847,100 $847,900 +0.1%
Barrie & District $771,400 $766,800 -0.6%
Ottawa $602,500 $621,600 +3.2%
Calgary $506,100 $557,500 +10.2%
Greater Montreal $499,200 $509,400 +2%
Halifax-Dartmouth $502,600 $518,500 +3.2%
Saskatoon $364,900 $372,800 +2.2%
Edmonton $359,500 $370,100 +2.9%
Winnipeg $326,800 $334,700 +2.4%
St. John’s $318,000 $332,000 +4.4%

*Some of the movements in the table above may be somewhat misleading since average prices simply take the total dollar value of sales in a month and divide it by the total number of units sold. The MLS Home Price Index, on the other hand, accounts for differences in house type and size and adjusts for seasonality.

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