Canadian Existing Home Sales (May 2019)

Rishi Sondhi, Economist | 416-983-8806

Date Published: June 14, 2019

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Home resales increased for the 4th time in 5 months in May.

  • Existing home sales advanced 1.9% (m/m) in May, building on April's 4.5% monthly gain and marking the fourth increase in the past five months. This is yet another sign that housing demand has stabilized after a weak 2018. 
  • In Vancouver, sales lept as high as a Kawhi Leonard jumpshot, soaring 24% m/m. Still, despite the lofty gain, the level of activity remains low in Vancouver. Sales were mixed in other markets in B.C., increasing in Victoria (+10% m/m) while falling in Okanagan-Mainline (-5.8% m/m) and being flat in Fraser Valley.
  • Performances were also mixed in the oil-producing provinces, with sales higher in Calgary (+6.8% m/m) and Edmonton (+1.5% m/m). In contrast, sales dropped in Regina (-16.1% m/m) and Saskatoon (-3.9% m/m).
  • Sales increased 4.7% month-on-month in Toronto, building on April's solid 11% monthly gain. Excluding Toronto, sales were down slightly, weighed on by declines in London (-5.6% m/m) and Barrie (-7.6% m/m)
  • Sales were flat in Quebec month-on-month, though were still 7% higher year-over-year, as relatively firm economic conditions continue to stoke demand.
  • Across the Atlantic Provinces, sales were higher in New Brunswick (+4.7% m/m) and Newfoundland and Labrador (+6% m/m), while falling in Nova Scotia (-13% m/m) and PEI (-2% m/m). 
  • National new listings dipped 1% month-on-month in May as declines in B.C., Alberta, Saskatchewan, Ontario and Newfoundland and Labrador were partially offset by rising listings in the other provinces.
  • With sales rising and new listings dropping, the Canadian sales-to-new listings ratio increased to 57.4 – thereby inching closer to sellers' territory. B.C's ratio increased from 44.3 to 49.0, indicating that markets still remain oversupplied relative to demand. Alberta's ratio climbed to 52.0 – its highest since January 2018. In Ontario, the ratio was at 61.2, above the long-term average and consistent with our forecast for positive price growth this year. The ratio came in at 57.1 in Toronto, three ticks higher than April. Markets remained tight in Quebec, with the sales-to-new listings ratio at 64.4 - 13 percentage points higher than its long term average. Market balance also remained tilted in favour of sellers in New Brunswick (ratio at 63.2), Nova Scotia (62.3) and PEI (63.1). In contrast, the ratio remained low in Newfoundland and Labrador (42.2).
  • Alongside the rise in sales, the average home price increased 2.4% month-on-month in May, marking the 3rd straight monthly gain. On a year-over-year basis, prices were up 2%, boosted by Ontario (8.5% y/y) and Quebec (3.2% y/y).
  • In contrast to the annual gain in average home prices, the quality-adjusted MLS home price index fell 0.7% from a year-ago, its weakest reading since 2009. Markets in oil producing provinces are weighing on headline price growth. Benchmark prices fell year-over-year in Calgary (-4%), Edmonton (-4%), Regina (-4%) and Saskatoon (-1%). In Vancouver, prices plunged 9% y/y – the softest showing in a decade. In contrast, price growth was strong in Montreal (+6% y/y) and Ottawa (+8% y/y), consistent with tight conditions. Price growth continues to be well contained in Toronto, advancing 3% year-over-year in May, in line with April's gain. 

Key Implications

  • Home sales continued their improvement in May, stoked by healthy labour markets and the recent slide in mortgage rates. Furthermore, markets have had additional time to adjust to federal and provincial policy measures, which weighed significantly on activity last year. 
  • With May's gain, sales are now sitting 4% above their first quarter average, boding well for residential investment in the second quarter.
  • Conditions remain relatively loose in Western Canada, with market balance below long-run norms in B.C. and Prairies. This suggests continued subdued price growth in these Provinces moving forward. In contrast, conditions favour sellers in markets east of Manitoba (Newfoundland and Labrador excepted), meaning that price growth will remain well supported in these regions in coming months.
  • Moving forward, we look for sales to trend higher, lifted by a rising population, a more stable rate environment and supportive federal measures.