The Canadian Real Estate Association is cutting its forecast for home sales this year and lowering its expectations for price increases.
In its latest housing market outlook, the association says it expects 532,545 properties to be traded through the Canadian MLS system this year, down 20 percent from the 2021 annual record.
The national median home price is projected to increase by 4.7 percent to $720,255.
The outlook is below CREA’s forecast in June which predicted a 14.7 percent drop in sales this year and a 10.8 percent increase in national median home value.
The updated forecast comes as CREA says home sales in August were down one percent compared to July and 24.7 percent lower than in August last year.
The national median home price in August was $637,673, down 3.9 percent from the same month last year.
âAugust saw steady month-on-month sales for the first time since February, which, along with stabilization of demand/supply conditions in many markets, could be an early sign that housing markets across Canada may see a sharp adjustment this year. Most have run their course,â said Jill Oudil, Kria’s president, in a release.
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Several markets, including Toronto, have seen housing conditions cool in recent months as climbing interest and mortgage rates put a damper on sales and began to weigh on prices.
The hike in rates has calmed the unruly bidding seen in many markets in winter and encouraged potential buyers to wait for more price drops.
Oudil believes that many are yet to hit the market, despite some recent declines.
âSome buyers may choose to stay on edge until they see clear signs of stabilization in borrowing costs and prices as well,â she said.
Before CREA’s data was released, Robert Cavik, senior economist at BMO Capital Markets, said the housing sector is facing a “unique” situation as many potential buyers got pre-approvals before the Bank of Canada tightened and Now looking at discounts between 10 and 20 percent. at the residence.
“If you can buy at a discount with a mortgage rate that no longer exists, that could be tempting,” he wrote in a Wednesday note to investors.
“But the bigger picture is that there is still a huge interest rate shock to absorb.”
The last time Ontario saw a one-year increase in the carrying cost of average home purchases was in the late 1980s, he said.
“In other words, this is the sharpest tightening of housing conditions in a generation, and it will come with further adjustments.”