Canada’s Housing Market Recovery Continues — for Now

Canadian home sales and prices have shown surprising resilience lately, though some say the real estate rebound might be short-lived.

By Josh Sherman | 2 minute read

Jun 16

Canadian home sales

Canadian home sales and prices increased in May building on a recovery that has been faster than market watchers anticipated.

For the first time in about two years, monthly Canadian home sales increased on a year-over-year basis as the national housing market kept revving on the road to recovery in May — but the latest Bank of Canada may take some air out of the tires moving forward.


Home sales last month were up 1.4% compared to May 2022 and 5.1% higher than in April, according to the Canadian Real Estate Association’s latest monthly data. Meantime, the average sale price for a home was $729,000, up 3.2% annually and the first such gain in a year. Three provinces that saw higher home prices this May than last: Alberta (+2.7%), British Columbia (+2.9%), and Nova Scotia (+1.2%). Ontario prices remained down 1.1% from a year ago. “The rebound has been evident for a number of months at this point, but May really drove the point home with year-over-year comparisons for both national sales activity and national average home price back in positive territory,” says Larry Cerqua, chair of CREA, in a news release.

“The re-emergent housing market seen this year has been surprising.”

The housing market’s speedy recovery — especially amid persistently elevated interest rates and widespread affordability challenges — has caught some experts off guard. “The re-emergent housing market seen this year has been surprising,” writes Central 1 Credit Union Chief Economist Bryan Yu in a report. “Adjustment to the new rate environment, high savings during the pandemic, elevated levels of immigration and impatience with the rate of price declines in 2022 have shifted demand higher,” he continues.


However, Yu is among the market watchers who suggest the Bank of Canada’s latest rate hike, on June 7, is likely to take a toll on market activity looking forward. “This will curb demand and cut into both sales and listings once again, while capping prices,” he adds. Beginning last spring, the central bank had — in an attempt to wrangle concerningly high inflation — embarked on eight consecutive rate hikes, temporarily hitting pause after an increase in January.

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With the pause ending and speculation mounting that another hike could follow at the BoC’s next scheduled rate announcement in July, Robert Kavcic, senior economist at BMO, agrees the real estate resurgence faces new headwinds. “Remember how we got here,” he writes in a separate report. “The Bank pauses rate hikes, effectively telling Canadians that the worst is over — housing activity rises quickly from the ashes. Following this sophisticated train of logic, it stands to reason that the Bank’s latest 25 [basis point] rate hike will again dampen market psychology somewhat and take some steam out of recent activity.”

Josh Sherman

Wahi Writer

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