There has been a significant change…
The national home price index fell by 0.8% to $822,900 on a seasonally adjusted basis in May, according to the latest data from the Canadian Real Estate Association.
The most significant price drops were registered in the nation’s hottest markets – in particular, southern Ontario and Chilliwack, British Columbia.
Resales also decreased by 8.6% from April to May, which moved activity levels back to their pre-pandemic strength, CREA said.
May marked the second straight month of declines in both price levels and sales activity, a trend that CREA attributed to much higher borrowing costs in the wake of the Bank of Canada’s two 0.5% rate hikes.
However, while multiple observers expected the housing market to moderate following the central bank’s rate hikes, the speed at which mortgage costs increased defied even CREA’s most pessimistic early predictions.
“What is surprising is how fast we got here,” said Shaun Cathcart, senior economist at CREA. “That cooling off of sales and prices seems to have mostly played out over the last two months.”
Robert Kavcic, senior economist at the Bank of Montreal, said that consumers have now awakened to the reality of this outsized-rate-hike environment.
“A correction in Canadian housing is well underway across a number of markets, and a long, cold summer likely lies ahead,” Kavcic said.