CREA Updates Resale Housing Market Forecast

Evidence suggests housing activity will continue to improve into 2020, with prices either continuing to rise or accelerating in many parts of Canada. Indeed, many housing market indicators continue to support this outlook.

Economic fundamentals underpinning housing activity remain strong outside of the Prairies together with Newfoundland and Labrador. The national resale housing market outlook continues to be supported by population and employment growth while consumer confidence is benefiting from low unemployment rates outside oil-producing provinces. Additionally, the Bank of Canada is widely expected to not raise interest rates in 2020.

Mortgage interest rates have declined, including the Bank of Canada’s benchmark five-year rate used by Canada’s largest banks to qualify applicants under the B-20 mortgage stress-test. Though the decline in the benchmark rate has been modest, it is helping to improve homebuyer access to home purchase financing.

Additionally, the Federal Government launched its First-Time Home Buyer Incentive earlier this year. Under the $1.25 billion shared equity program, the federal government contributes a portion of the home purchase price in exchange for an equity share of the home’s value.

Recent national sales trends have improved by more than expected over the second half of 2019 while new listings have fallen. These trends have caused many housing markets to tighten, which has sharply lowered the national number of months of inventory. In November 2019, this measure of the balance between supply and demand hit its lowest level since mid-2007. This is resulting in increased competition among buyers for listings and providing fertile ground for price gains.

Excluding the Prairies together with Newfoundland and Labrador, the combined number of months of inventory for the rest of Canada is at a 15-year low – just 0.1 months above the lowest level on record – and continues to fall. The number of homes available for sale in these provinces, which represent over 80% of national activity, is at a 15-year low. This is anticipated to support solid home price growth in 2020, particularly if current trends intensify.

National home sales are projected to recover to 486,800 units in 2019, representing a 6.2% increase from the five-year low recorded in 2018. The small upward revision compared to CREA’s previous forecast reflects a stronger than anticipated uptick in activity in recent months in B.C., Ontario, Quebec and Nova Scotia. This represents the return of activity to around its 10-year annual average. On a per capita basis, the forecast for national sales this year is tied with 2008 and 2013 for the lowest since 2001.

British Columbia was the only province to weigh on the national sales figure in 2019, with sales for the province this year finishing 2.3% below where they stood in 2018. Ontario and Quebec provided most of the improvement in sales this year, with activity expected to be up 9% and 11% respectively.

The national average price this year is on track to rise by 2.3% on an annual basis to just over $500,000. In line with the balance between supply and demand across the country and trends earlier in the year, average prices in 2019 are expected to be down in the three westernmost provinces together with Newfoundland and Labrador, with robust gains in Ontario, Quebec and the Maritimes.

Sales are forecast to continue to improve through 2020, albeit more slowly than they did over the summer of 2019. National home sales are forecast to rise by 8.9% to around 530,000 units next year. While sales are expected to trend higher, most of this annual increase in 2020 reflects a weak start to 2019 rather than a significant change in sales trends over the forecast horizon. Of the forecast 40,000+ sales increase for 2020, British Columbia and Ontario are expected to contribute close to an additional 15,000 transactions each, while Quebec and Alberta are anticipated to contribute 8,000 and 2,000 additional transactions respectively.

The national average price is forecast to rise by 6.2% in 2020 to $531,000. Average price trends across Canada in 2020 are generally expected to resemble those in 2019, with small declines in Alberta, Saskatchewan and Newfoundland and Labrador, and solid gains in Ontario, Quebec and the Maritimes. In British Columbia, the average home price is expected to rebound next year following this year’s decline. In regions with supply shortages, price gains may exceed forecast levels should shortages become more acute than anticipated.

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About The Canadian Real Estate Association

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry associations. CREA works on behalf of more than 130,000 REALTORS® who contribute to the economic and social well-being of communities across Canada. Together they advocate for property owners, buyers and sellers.

For more information, please contact:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca­