Canadian Home Sales Surprisingly Strong in December

The actual (not seasonally adjusted) number of transactions was 3.7% above December 2022, the largest year-over-year gain since August. 

On an annual basis, home sales totalled 443,511 units in 2023, a decline of 11.1% from 2022. It was technically the lowest annual level for national sales activity since 2008, although it was very close to levels recorded in each of the five years following the 2008 financial crisis, as well as the first year the uninsured stress test was implemented in 2018.

CREA is forecasting a 10.4% gain in home sales this year, boosted by the expected easing of monetary policy by the Bank of Canada in the second half of 2024.

“While December did offer up a bit of a surprise in sales numbers to cap the year, the real test of the market’s resilience will be in the spring,” said Larry Cerqua, Chair of CREA.

The number of newly listed homes dropped by 5.1% month-over-month in December, bringing them to the lowest level since June.

With sales up and new listings down in December, the national sales-to-new listings ratio tightened to 57.8% compared to just 50.5% in November. The long-term average for the national sales-to-new listings ratio is 55%.

There were 3.8 months of inventory on a national basis at the end of December 2023, down notably from 4.2 months at the end of November. The long-term average is five months of inventory.

The Aggregate Composite MLS® Home Price Index (HPI) declined by 0.8% month-over-month in December 2023. In line with firming market conditions, this measure was smaller than the 1% decrease recorded in November and the 0.9% decline logged in October.

Price declines of late have been predominantly located in Ontario markets, particularly the Greater Golden Horseshoe and, to a lesser extent, British Columbia. Elsewhere in Canada, prices are mostly holding firm or, in some cases (Alberta, New Brunswick, and Newfoundland and Labrador), continuing to climb. As market conditions have recently been evolving, price trends are becoming more of a mixed bag where the regional differences are less clearly defined.

The Aggregate Composite MLS® HPI was up 0.7% on a year-over-year basis in December 2023, up slightly from the 0.6% year-over-year gain in November.

CREA is forecasting modest price increases on a national basis in 2024.