Shivani Reddy

Summary On a seasonally adjusted basis, home sales increased 2.3% from January to February, a third monthly gain in five months. The increase was widespread across provinces, with only Manitoba (-7.9%), Nova Scotia (-0.9%), and Alberta (-0.4%) registering decreases. On the supply side, new listings dropped by 7.9% in the month, a sixth decrease in eight months. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that about one in five listings have been withdrawned in the last three months. Overall, supply decreased slightly in Canada as testified by the number of months of inventory (active listings to sales) decreasing from 4.2 to 4.1 in February. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only B.C. and Manitoba indicating a ratio above average. Housing starts in Canada increased in February (+27.4K to 244.0K, seasonally adjusted and annualized), which was above consensus expectations calling for a 220K print. This jump almost fully erased Januarys 32.4K pullback. In urban areas, increases in housing starts were seen in Ontario (+26.4K to 98.4K), the Prairies (+10.5K to 43.8K), Quebec (+5.1K to 40.4K) and the Maritimes (+0.8K to 5.8K). Starts in BC (-12.8K to 33.7K), meanwhile, declined to their lowest level since March 2022 on a weakness in multiples (-12.3K to 28.4K) while single units starts were essentially steady (-0.5K to 5.3K). The Teranet-National Bank Composite National House Price Index decreased by 0.5% in February compared to the previous month and after seasonal adjustment, the tenth consecutive monthly decrease. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Toronto (-2.7%), Calgary (-2.4%), Halifax (-1.8%), Edmonton (-0.8%), Hamilton (-0.3%), Montreal (-0.3%) and Ottawa-Gatineau (-0.2%). Conversely, prices increased in Vancouver (+3.8%), Victoria (+1.9%) and Quebec City (+0.1%). while they remained stable in Winnipeg. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From National Bank of Canada The Teranet-National Bank Index continued to decline in February so that the cumulative decline in prices since their peak in May 2022 totaled 11.2%, the largest contraction in the index ever recorded. The current decline in prices has even surpassed the 9.2% loss in value that occurred during the 2008 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory well into 2023 and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still anticipate a total correction of about 15% nationally by the end of 2023, but this assumes that policy rate hikes are over and declines begin at year-end. Although corrections are being seen in all markets covered by the index, the CMAs that have seen the largest price growth over the past two years are also those that have seen the largest declines to date. Ontario, British Columbia and the Maritimes thus appear to be more vulnerable, while the Prairie markets are less vulnerable, as affordability issues are less acute. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 0.5% in February compared to the previous month and after seasonal adjustment, the tenth consecutive monthly decrease. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Toronto (-2.7%), Calgary (-2.4%), Halifax (-1.8%). Edmonton (-0.8%), Hamilton (-0.3%), Montreal (-0.3%) and Ottawa-Gatineau (-0.2%). Conversely, prices increased in Vancouver (+3.8%), Victoria (+1.9%) and Quebec City (+0.1%), while they remained stable in Winnipeg. From February 2022 to February 2023, the composite index decreased by 4.7%, the second consecutive month in which the annual change in the index was in negative territory. Price increases in Calgary (8.8%), Quebec (5.0%). Edmonton (1.9%) and Montreal (0.8%) were entirely offset by decreases in Victoria (-1.4%), Ottawa-Gatineau (-2.3%), Winnipeg (-2.7%), Halifax (-3.2%), Vancouver (-3.9%), Toronto (-8.8%), and Hamilton (-14.0%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf