Fewer homes changed hands in July but Canadian real estate remains out of reach for many first-time buyers.
The Canadian Real Estate Association (CREA) says national home sales fell 3.5 per cent compared to June, for the fourth straight monthly decline. Sales are down a cumulative 28 per cent from the March peak.
Despite the slowdown, it was the second-busiest July on record.
In two-thirds of all local markets, sales were down, led by Edmonton and Calgary. CREA says that might be because sales just started falling in those two cities. Montreal sales ticked up after moderating at the start of the year.
Even though sales continue to fall, prices have gone up. The national MLS Home Price Index rose 0.6 per cent from June and is up 22.2 per cent year over year.
Ontario leads the way in year-over-year price growth at around 30 per cent, driven mostly by gains outside of the Greater Toronto Area (GTA).
"The slowdown we've seen in home sales over the last few months has not been surprising, given that the level of activity we were seeing back in March was unsustainable," said Shaun Cathcart, CREA's senior economist.
"But we are not returning to normal, we are only returning to where we were before COVID, which was a far cry from normal. The problem of high housing demand amid low supply has not gone anywhere – it's arguably worse."
Lack of inventory
Besides historically low mortgage rates, prices remain elevated due to a lack of inventory for sale.
The number of newly listed homes dropped by 8.8 per cent in July compared to June, with the GTA, Montreal, Vancouver, and Calgary leading the way in declines.
The national sales-to-new listings ratio was 74 per cent in July 2021, compared to the long-term average of 54.7 per cent. The 2.3 months of inventory is half of the long-term average.
BMO senior economist Robert Kavcic says markets remain strong but the frenzied pace seen earlier in the year has likely passed.
"From a bigger-picture perspective, we might be close to the point where major pandemic-era rebalancing has run its course—think single-detached versus condos, rural versus urban, and cottages versus travel and other spending," said Kavcic.
"One could argue that some of those shifts went too far during the height of the madness, and we could see some undoing ahead, even if a lot of the underlying change is permanent."
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.