Canadian existing home sales fall quite sharply in April, likely to remain depressed for several months

Canadian existing home sales dropped quite sharply by 56.8 percent sequentially in April. The fall in April was more than double the weakest point of the Global Financial Crisis. On a year-on-year basis, the sales fell 57.6 percent, blowing through the prior record 46.7 percent fall in April 1982.

The effect was strongly felt throughout the nation as almost all provinces recorded sales activity drop between 40 percent and 60 percent sequentially. The sharpest falls were mainly in the largest markets: Ontario, Quebec and B.C., which recorded a decline of 60.6 percent, 63.4 percent and 55.4 percent, respectively.

Moreover, listings dropped as well, falling 55.7 percent sequentially in April. This signifies that the national sales-to-new listings ratio fell only modestly, dropping to 62.4, a level that would basically be associated markets in seller’s territory. This is not a typical time, and this indicator is less useful than normal given markets that seem to be in stasis – Quebec's 101.6 reading, for example, doesn’t appear particularly informative given the context that generated it.

The average home price dropped 10.1 percent sequentially in April, with the ‘actual’ average price dropping to roughly where it stood this time last year (-1.3 percent year-on-year). The falls were quite broad based, with Ontario recording the largest fall of 13.7 percent.

On the contrary, the quality-adjusted MLS home price index dropped a more modest 0.6 percent sequentially, and in a few key markets such as Ottawa and Regina, price growth stayed positive on a ‘like-for-like’ basis.

“April's data confirmed what we were all expecting, namely that the pandemic drove sales to historically depressed levels. Not only did buyers retreat to the sidelines in record numbers, so too did sellers. This meant that markets remained in balanced territory overall”, stated TD Economics in a research report.

With activity contracting steeply and likely to remain depressed for many months, average prices are expected to be distorted, and not fully represent wider market conditions.

“With April in the rear-view, we can start talking about ever so tentative improvements in sales activity as provinces begin to gradually re-open their economies. We do expect sales to remain depressed for a few months longer as job markets slowly improve and buyers remain cautious, but a normalization process is likely already underway”, added TD Economics.