Canada home sales, prices drop on month in May amid buyer fatigue

OTTAWA: Canadian home sales and the average price fell in May compared with the previous month, as frustrated would-be buyers took a break and some of the pandemic urgency to secure a home began to fade, the Canadian Real Estate Association (CREA) said on Tuesday.

Canadian home sales fell 7.4% in May from April, while the average selling price was down 1.1% from the previous month, according to CREA data. It was the second consecutive month of declines after a blazing start to the year.

"While housing markets across Canada remain very active, we now have two months of moderating activity in the books, and that goes for demand, supply and prices," Cliff Stevenson, chair of CREA, said in a statement.

"More and more, there is anecdotal evidence of offer fatigue and frustration among buyers, and the urgency to lock down a place to ride out COVID would also be expected to fade at this point given where we are with the pandemic," he added.

Provinces across Canada have begun reopening from a third round of shutdowns and COVID-19 vaccinations are being rapidly deployed, buoying hopes of a return to normal in the second half of the year.

Canada's housing market surged in late 2020 and early 2021, with home prices escalating sharply amid investor activity and fear of missing out. Many smaller centers saw record price gains as urbanites fled to suburbs and beyond in search of more space.

The national average selling price was C$696,000 ($571,429) in May, down 1.1% from April but up 38.4% from a year earlier, the industry group said. Home prices fell in April and May of last year amid first-wave COVID-19 shutdowns.

Actual sales, not seasonally adjusted, rose 103.6% from a year earlier, while CREA's Home Price Index was up 24.4% on the year and up 1% from April.

Canadian housing starts, meanwhile, rose 3.2% in May compared with April as multiple urban starts jumped, offsetting a drop in single-detached starts, separate data from the Canadian Mortgage and Housing Corporation showed.

"Toronto, Vancouver and Montreal starts trended lower in May, as these markets continued to moderate from the historical highs recorded in the first quarter of the year," said Bob Dugan, chief economist at CMHC, in a statement.