Source : CBC News
Canada saw a slight dip in both housing starts and home sales in April 2024, compared to March, as reported by the Canada Mortgage and Housing Corporation (CMHC) and the Canadian Real Estate Association (CREA).
Price increases in markets such as Calgary may have contributed to a drop in sales, according to an RBC economist
According to CMHC, the annual rate of housing starts—new homes beginning construction—dropped by 1% from 242,267 in March 2024 to 240,229 in April. The six-month average measure of trends, which is seasonally adjusted, also decreased by 2.2%. The decline affected both multi-unit and single-detached homes, with significant drops observed in major cities like Toronto, Vancouver, and Montreal.
Bob Dugan, CMHC's chief economist, noted that high interest rates have contributed to the reduction in multi-unit housing starts. He highlighted that the recent volatility in housing starts in Toronto, Vancouver, and Montreal reflects the ongoing impact of challenging borrowing conditions from the previous year. Dugan anticipates continued downward pressure on housing starts in these large urban centers.
In terms of housing affordability, BMO chief economist Doug Porter pointed out that multi-unit projects, such as apartments and condominiums, remain the dominant type of new housing starts. However, these projects take longer to complete than single-family homes, meaning they won't alleviate affordability issues in the near future.
The CREA reported a 1.7% decline in home sales across Canada in April 2024 compared to March, although sales were higher than in April 2023. RBC economist Rachel Battaglia indicated that many large markets in Canada are "continuing to soften," with Alberta experiencing a notable drop in sales activity. This decline could be due to rapid price increases in Alberta, particularly in Calgary, which may be pushing potential buyers out of the market as affordability worsens.
Despite the month-over-month drop, the increase in sales compared to April 2023 is partly attributed to the Easter holiday, which fell earlier in March this year, allowing for more business days in April 2024. However, the average sale price in April 2024 was down 1.8% from April 2023, at $703,446.
The number of properties for sale, or inventory, increased as the spring real estate season began. This rise in listings did not lead to significant price drops, with prices remaining relatively flat. Battaglia suggested that budget-constrained buyers are waiting for interest rate cuts and improved affordability before re-entering the market.
The CREA noted that the combination of lower sales and more listings in April resulted in a 6.5% increase in the overall number of properties on the market, the highest level since just before the COVID-19 pandemic.
