Canadian Existing Home Sales (July 2019)

James Marple, Senior Economist | 416-982-2557

Date Published: August 15, 2019

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Big month for Canadian housing market in July

  • National existing home sales rose a robust 3.5% (m/m) in July, following an upwardly revised gain of 0.6% in June (previously reported as a 0.2% pullback).
  • In Vancouver, sales rose a whopping 26.4%, pushing year-on-year sales to a positive 22.6% (from -15.0% in June). Sales growth was softer elsewhere in B.C., but overall the province was up 13.7% (m/m) on the strength in Vancouver. Gains in Vancouver push the market back toward balanced market territory, suggesting the city is through the worst in terms of price declines.
  • In the Prairies, sales were up in Alberta (+1.9%), with Calgary up 2.4% and Edmonton up 1.7%, but down in Saskatchewan (-0.5%) and Manitoba (-3.6%).
  • In Ontario sales growth continued its recent solid trend, rising 2.4% in the month. Sales in Toronto were up an even stronger 5.1%. Year-on-year sales in Toronto are up a robust 23.5%. Sales-to new listings are well planted in balanced market territory in the province and the big city.
  • Sales advanced 1% month-on-month in Quebec, but are up an even more impressive 20.8% year-over-year, buoyed by a solid economy that continues to boost housing demand.
  • Across the volatile Atlantic Provinces, sales were higher in New Brunswick (+6% m/m), Nova Scotia (+1.5% m/m), and Newfoundland and Labrador (+13.7% m/m), but down in PEI (-12.5%).
  • National new listings edged 0.4% lower month-on-month in July, led by declines in B.C. (-2.8% m/m) and Quebec (-2.0% m/m). Conditions can only be described as tight in Quebec, with the sales to new-listings ratio at 68.9% well in sellers' market territory.
  • The average home price increased 2.6% month-on-month in July, marking the fifth straight monthly gain. On a year-over-year basis, prices were up 3.9%, driven by gains in Ontario (7.3%) and Quebec (5.1%). The quality-adjusted MLS home price index also edged into positive territory on a year-on-year basis, hitting 0.2% (from -0.3% in June).

Key Implications

  • This can only be described as a solid month for the Canadian housing market and a stupendous month for Vancouver where conditions have been the most depressed. As they have in the past, strong population growth, solid job growth and lower mortgage rates appear to be doing the job of supporting Canadian housing demand.
  • With most markets in balanced territory or better, the immediate downside risk to home prices have diminished considerably. While affordability will remain a constraint in major high-priced markets, prices appear more likely to increase than decrease over the next year.
  • Continued evidence of a healthy domestic economy creates some challenges for the Bank of Canada. However, we do not expect it to react with undue optimism given the considerable external challenges, even more so in light of recent evidence that global economic growth is even softer than previously thought.

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