Canadian home prices stabilize in advance of spring market

Canadian home prices as measured by the seasonally adjusted Aggregate Composite MLS Home Price Index (HPI) were flat on a month-over-month basis in February 2024, ending a streak of five declines that began last fall, according to the latest data from the Canadian Real Estate Association (CREA).

“It’s looking like February may end up being the last relatively uneventful month of the year as far as the 2024 housing story goes,” says Shaun Cathcart, CREA’s senior economist. “With so much demand having piled up on the sidelines, the story will likely be less about the exact timing of interest rate cuts and more about how many homes come up for sale this year.”

Higher levels of sales

Home sales activity recorded over Canadian MLS Systems dipped 3.1 per cent between January and February 2024, giving back some of the cumulative 12.7-per-cent increase in activity recorded in December 2023 and January 2024. However, the general trend has been somewhat higher levels of activity over the last three months compared to a quiet fall market in 2023.

The actual (not seasonally adjusted) number of transactions came in 19.7 per cent above February 2023. Part of that double-digit gain reflects the fact that February 2023 sales were one of the lowest for that month in the past two decades, but it also reflects the fact that current activity has climbed back to only about five per cent below the 10-year average.

The number of newly listed homes edged up 1.6 per cent on a month-over-month basis in February. Gains may rise in the months ahead depending on how many owners are preparing to list their properties for sale this spring.

Activity picking up

“After two years of mostly quiet resale housing activity there’s a feeling that things are about to pick up,” says Larry Cerqua, chair of CREA. “At this point, it’s hard to know whether buyers are going to wait for a signal from the Bank of Canada or whether they’re just waiting for the spring listings to hit the market. Either way, neither of those are likely too far off, so if you’re hoping to buy or sell a property in 2024, contact a realtor in your area today.”

With sales edging down and new listings inching up in February, the national sales-to-new listings ratio eased a bit to 55.6 per cent. The long-term average for the national sales-to-new listings ratio is 55 per cent. A sales-to-new listings ratio between 45 per cent and 65 per cent is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers’ and buyers’ markets respectively.

There were 3.8 months of inventory on a national basis at the end of February 2024, up a touch from 3.7 months at the end of January. The long-term average is about five months of inventory.

The actual (not seasonally adjusted) national average home price was $685,809 in February 2024, up 3.5 per cent from February 2023.