March Housing Market Shows Resilience As New Builds and Sales Rise

The country’s real estate market showed some signs of recovery in March; although home prices were still down, home sales and new home builds went up.

Housing Starts

The annual pace of housing starts – new home construction projects – recovered in March from a sluggish performance in February, highlighting the resilience of the country’s housing market.

The seasonally adjusted annual rate (SAAR) of housing starts was 192,527 units last month, up by 15.8% from 166,290 units month over month.

The SAAR of urban starts increased by 17% to 178,033 units. Multiple urban starts rose by 18.6% to 135,894 units, while single-detached urban starts increased by 12.1% to 42,139 units. Meanwhile, rural starts were estimated at a SAAR of 14,494 units, according to Canada Mortgage and Housing Corporation (CMHC).

The six-month moving average of housing starts remains near historical levels, said Bob Dugan, CMHC’s chief economist.

Home Prices

Home prices declined for the sixth straight month – the first March drop outside a recession.

The Teranet-National Bank House Price Index showed prices fell by 0.31% last month from February and were down by 1.74% from the peak reached in September 2018.

Compared to last year, prices remain 1.53% higher. However, the year-over-year (YOY) increase showed that the annual pace of growth is continually slowing.

Let’s look at the figures in the country’s largest housing markets:

Toronto prices sank by 0.29% month over month (MOM) and were down by 4.32% from the July 2017 peak. Prices were up by 3.26% from last year, but the annual pace of growth has slowed for the past three consecutive months.

Vancouver was a little worse than Toronto. Vancouver prices dropped by 0.46% MOM and were down by 4.31% from the July 2018 peak. Prices were also down by 2.1% from last year, the biggest annual decline since June 2013.

Meanwhile, Montreal reached a new all-time high. Montreal prices rose by 0.12% MOM and were now up by 5.46% from last year. The annual pace of growth is far outperforming the national index, but the city’s prices have underperformed the market by 20% since 2005, according to Better Dwelling.

Home Sales

National home sales edged up by 0.9% after a sharp drop in February, according to the Canadian Real Estate Association (CREA). However, year-over-year sales activity fell by 4.6% to the weakest level for March since 2013. It was also almost 12% below the 10-year average for the month.

In British Columbia, Alberta and Saskatchewan, sales were more than 20% below their 10-year average. In Quebec and New Brunswick, sales activity ran well above average. In the Greater Toronto Area, sales were flat at 7,187 – down by only one home YOY.

Meanwhile, the number of newly listed homes rose by 2.1%. New supply increased in about two-thirds of all local markets, led by Winnipeg, Regina, Victoria and elsewhere on Vancouver Island. In contrast, new listings decreased in the Greater Toronto Area (by 5.1% YOY), Ottawa and Halifax-Dartmouth.

With new listings improving more than sales, the national sales-to-new-listings ratio eased to 54.2% from 54.9% in February. This market balance measure has largely remained close to its long-term average of 53.5% since early 2018.