Canadian Existing Home Sales (May 2024)

Canadian home sales, benchmark prices down in May 

• Canadian existing home sales declined 0.6% month-on-month (m/m) in May, leaving them 12% below their pre-pandemic level. Nation-wide, sales were driven higher by gains in Alberta (+2.5% m/m) and B.C. (+1.9% m/m). In contrast, sales fell in Ontario (-2.0% m/m) and Quebec (-2.4% m/m).
• New listings inched higher by 0.5% m/m last month, leaving them fully in line with their long-term average. The combination of higher listings and lower sales left the sales-to-new listings ratio at 52.8%, down about 0.6 ppts from April and modestly below the long-term average.
• Canadian average home prices increased 1% m/m in May on the back of gains in B.C. (2% m/m) and Alberta (1.4% m/m). Elsewhere, prices were flat in Ontario and Quebec, down across other parts of the Prairies and were up about 1% m/m, on average, across the Atlantic.
• The MLS home price index, a more "like for like" measure, declined by 0.2% m/m. Prices for detached units were flat, while condo prices were down 0.3% m/m.  

Key Implications

• May's tepid performance kept the narrative of a soft spring selling season intact, as elevated borrowing costs and Bank of Canada uncertainty kept buyers on the sidelines. For their part, sellers are behaving as if it’s the spring season, with May's modest gain in listings marking the 2nd straight monthly increase. Notably, compositional forces were heavily in play last month (i.e. a higher share of more expensive properties sold), with average prices posting a 1% m/m gain, in contrast to the mild decline in quality-adjusted benchmark prices. 
• We're expecting a firmer performance in June, amid a decline in bond yields, consistent with the signal from the higher frequency data we track. The Bank of Canada also cut their policy rate this month, although this single cut probably hasn't moved the dial on affordability much. Moving forward, further rate relief is likely in the cards, which should set the stage for a stronger second half of 2024.

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