Worst January for home sales since 2009, CREA says

Home sales in January were the lowest for the month since 2009 and down 37.1 per cent compared with a year ago, the Canadian Real Estate Association (CREA) said Wednesday.

The drop came as January sales also fell on a month-over-month basis, as they dropped three per cent compared with December.

CREA said the lower numbers neutralized the small gains made in December.

"The market we are in is a bit of a roller-coaster these days," Varun Mathur, a real estate broker and broker of record at ReMax Paradigm Real Estate, said on Tuesday.

The month-over-month drop came as gains in Hamilton-Burlington, Ont., and Quebec City were more than offset by lower sales in Greater Vancouver, Victoria and elsewhere on Vancouver Island, Calgary, Edmonton and Montreal.

Fewer sellers, fewer options for buyers

Mathur said that properties in Greater Toronto Area suburbs like Mississauga and Ajax are still seeing multiple offers and buyers bidding above asking price.

"The reason is that there are fewer sellers in the market right now. A lot of people have the perception that, 'Oh, the market has tanked and we will not be able to sell our property right now,' and they want to kind of hold off."

Home sales tumbled last year as rising mortgage rates increased the cost of borrowing for Canadians and slowed the housing market.

"A lot of sellers are kind of in a wait-and-watch mode," Mathur said. "They would like to get the prices their neighbours got last year. They realized they might not get it right now; a lot of them are not compelled to sell."

The biggest challenge for buyers is less inventory, he said.

CREA's report said that the number of newly listed homes was up 3.3 per cent on a month-over-month basis in January.

However, it noted that despite the increase, new listings remained historically low across the country, with new supply in January the lowest level for that month since 2000.

"[Buyers] are not finding the houses that they would like to buy, and the prices, even though they are down from the peaks, it is still a big challenge for them to qualify for the mortgage," Mathur said.

The housing market is still in correction mode, said Robert Hogue, assistant chief economist at RBC in Toronto. 

"Activity wise, I think we're probably not that far. It's simply because — well, in large part because — we can't fall that much lower," he said. "We are at fairly depressed levels, something along the lines of what we saw back during the global financial crisis of [2008] or 9, if we exclude the lockdown period of the spring of 2020."

"But in terms of prices, we think the bottom is a little bit further away, and probably at best around summer time and maybe a little bit later because the market is still adjusting to higher interest rates."

With new listings up and sales down in January, sales-to-new-listings eased back to 50.7 per cent, CREA said.

The actual national average home price was $612,204 in January, down 18.3 per cent from January 2022.