Three main messages from CREA today, despite the market sliding sideways.
New Listings Up, Sales Down, and Prices Flat: What Does It Mean for the Fall Real Estate Market?
The Canadian Real Estate Association (CREA) released its August data showing that home sales are down 0.7% nationally in the past month. It also highlighted that, although home prices remained flat since July, they are down 3% from a year ago. The sales-to-new listings ratio decreased 2 points to 49.1%, putting us in a balanced market, albeit tilted towards buyers’ due to all the new listings.
Are we going to see a busy fall market? There are two components of a strong fall season, which are listings and sales. Promisingly, there was a burst of new listings in late August (up 3.3%), which sets us up for even more in September and plenty of fresh new choices for consumers to stir up interest. In terms of sales, it’s hard to predict, but general economic conditions aren’t ideal. We might soon be hearing more about stagflation, the latest job data from August showed a loss of 42,000 jobs, and 5-year fixed mortgage rates are already on the rise.
Another factor at play is consumer sentiment. CREA tracks that in a few ways, but one important question they ask Canadians is about their willingness to make major purchases. According to their data, we’re seeing a trend towards more people saying it’s a good time, and fewer people saying it’s a bad time. An overall positive market indicator when it comes to buying a home.
What’s happening in the boarder economy that’s influencing the fall housing market? Thanks to persistent high gas prices, inflation has been rising and is at a precarious level right now. There is also the ongoing trade war and escalating tariffs between Canada and the US. In addition, we’ve seen bond yields rising, which in turn means increasing mortgage and other borrowing rates. In fact, the market has already priced in a rate increase in the next 3 months. It’s important to watch how the Bank of Canada reacts to the current economic headwinds.
In summary, here are the three main messages from CREA today:
- New listings are starting strong, the first half of a busy fall market.
- Persistently high fuel prices are bound to trickle through the economy and cause inflation.
- We should expect scaled back fall market activity despite the economic uncertainty ahead, thanks to stable home prices and balanced housing market conditions.
It’s hard to say what’s coming down the pipeline for the fall housing market as there are indicators in both positive and negative directions. It’s probably best to take CREA’s advice from today’s report: “This is one of those you better look out the windshield more than the rearview moments”.
The bottom line? Expect a moderated fall market.