Canadian Existing Home Sales (December 2020)

Rishi Sondhi, Economist | 416-983-8806

Date Published: December 15, 2020

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Spectacular end to a strong year for Canadian home sales

  • In December, Canadian home sales jumped 7.2% month-on-month to a new record high of nearly 60k units (not annualized), thus sending the year-on-year sales pace to a blistering 47.2%. For 2020 overall, home sales were up 12.6%, marking the strongest increase since 2001. This occurred despite a sharp contraction in employment and significant slowdown in population growth.
  • Provincially, sales were up in 6 of 10 provinces in December, with strong gains recorded in Ontario (+12.0% m/m) and B.C. (+10.0%). On the flipside, declines were recorded in every Atlantic province, paced by PEI (-21.7%).
  • New listings increased by 3.4% m/m in December. With sales growth outpacing new listings, the national sales-to-new listings ratio increased to 77.4 – the highest in almost 20 years. Almost every province was in sellers' territory in December, highlighted by provinces in Eastern Canada (Quebec: 90.8; New Brunswick: 87.9; Nova Scotia: 87.1). 
  • Strong demand was reflected in prices. Indeed, Canadian average home prices surged by 3.0% m/m in December. On a year-on-year basis, they were up 17.1%, marking an acceleration from November. However, prices were up in only 4 of 10 provinces during the month, with the largest gains occurring in Ontario (+3.1%), despite poor affordability, and B.C. (+2.5%). 
  • Compared with the average sales price, the MLS home price index, a more "like for like" measure, increased 1.5% m/m. Single family home prices rose 2.0% m/m (and a robust 16.4% y/y), whereas apartment prices advanced by a smaller 0.3% m/m (and decelerated to 4.2% y/y). The oversupplied Toronto market continued to weigh on condo prices by dropping 0.6% m/m, the third straight decline. 

Key Implications

  • What a fitting end to a surprisingly strong year. Relative strength in high-wage employment, record low mortgage rates, rising supply of homes available for purchase and solid demand for larger units all supported exceptional sales and price growth last year. Looking ahead, we're expecting sales and prices to cool somewhat from their robust pace in the first quarter. However, December's surprisingly strong performance makes hitting our forecast a tougher proposition. 
  • Demand for detached units remained robust to close last year as year/year growth in sales continued to be elevated in large markets like Toronto and Vancouver. As a consequence, the ratio of detached to condo prices continued to climb rapidly. This could hamper move-up buying going forward. Also, a chunk of December's gain can be put down to strong growth in GTA condo sales, itself likely a function of heavy discounting in recent months, the magnitude of which could lessen in the future.
  • January will be an interesting month as we'll be looking for signs that activity has been impeded by the stay-at-home order issued by the Ontario government. Our first thought is that any impact would be minimal, given that showings are still allowed (although open houses continue to be restricted), and activity has thus far been robust through the pandemic.