Canadian Real Estate Prices See First Increase In 8 Months, Sales Fall

Canadian real estate finally saw some positive news—sort of. Data from the Canadian Real Estate Association (CREA) shows home prices climbed in February, marking the first positive move in over half a year. The odds of that climb being noise are even higher than usual, as sales continue to fall and the market reported the weakest demand balance in at least 9 years.

Canadian real estate prices made a small but significant increase last month. The price of a typical home climbed 0.5% (+$3.5k) to $661.3k in February, marking the first monthly increase in 8 months. However, prices remain 4.8% (-$33.2k) lower than last year, and 21.4% (-$180.0k) lower than peak. One month isn’t a trend, but every trend starts with one.

Despite the mild price bump, already weak winter demand eroded even further. There were 30,244 homes sold through the MLS in February, 6.1% lower than last year. It was the weakest volume for the month since 2023, but keep in mind February is often one of the weaker months when it comes to sales.  

The winter slowdown hasn’t impacted sellers to the same degree in recent years. There were 64,531 new listings in February, only 0.4% lower than last year—roughly the same level the market’s seen for 3 years. February volume hasn’t budged much in the past 3 years, but it’s a lot higher than the lows in 2023 (+25.6%) or 2019 (+12.2%). 

Buyers falling faster than sellers helped push the Sales-to-New-Listings Ratio (SNLR) down to 46.9% in February, confirming it as the lowest point in the available decade of data.

Cities like Toronto are also demonstrating that new listings aren’t the only inventory data point that matters. Existing inventory has built up in a few markets, and anecdotal evidence from some brokerages suggests some sellers are waiting for spring, hoping for the market to firm first. 

Prices moving higher for the first time in months is encouraging, but market activity isn’t. It’s often said that price growth without volume has no confirmation. Finding a few buyers willing to pay more is easier than the general market. However, the longer sales stagnate, the more pent-up demand builds. While that doesn’t mean more buyers will suddenly be able to buy, it can trigger those sitting on the sidelines and waiting for a bottom to jump into the market.