The Canadian Real Estate Association (CREA) has issued its latest forecast for home sales activity and average home prices via MLS systems of Canadian real estate boards and associations for 2023 and 2024.
According to the report, national home sales have remained stable since the summer of 2022 and are expected to rise gradually toward the long-term trend in 2024.
CREA economists expect buyers to return to the market after waiting on the sidelines for added certainty around mortgage payments and property value.
The Bank of Canada indicating a pause in interest rate hikes in January 2023, followed by meetings in March and April where they did not raise the overnight rate, along with levelling out of home prices, has helped ease some uncertainties.
Risks to the forecast
However, risks to the forecast include the worsening of Canada’s housing supply issue faced across the entire continuum, including in the existing home market.
New listings have been dropping fast and are currently at 20-year lows, which could affect the sales forecast and pose an upside risk to the average price forecast. The report also highlights the possibility of a short and mild recession in the middle of 2023 becoming more severe and longer-lasting than anticipated.
Sales forecast for 2023
CREA forecasts that some 492,674 properties will trade hands via MLS in 2023, a 1.1 per cent decline from 2022. This was almost unchanged from CREA’s previous national forecast.
However, there were two notable offsetting revisions: Alberta home sales were revised lower on a weaker-than-expected first quarter. In contrast, Ontario home sales were revised higher on a somewhat stronger-than-expected first quarter.
National average home price forecast
The national average home price is forecast to decline 4.8 per cent annually to $670,389 in 2023. This is up about $8,000 from CREA’s previous forecast owing to a compositional boost in the first quarter of 2023 from outsized gains in the pricey regions of B.C.’s Lower Mainland and the Greater Toronto Area.
Sales and price forecast for 2024
National home sales are forecast to rise 13.9 per cent to 561,090 units in 2024 as housing markets continue to return toward trend and monetary policy moves towards a more neutral stance.
This forecast would still leave activity well below the 2021 record, but it would lift it back in line with the long-term trend and place it back above the 10-year average.
The national average home price is forecast to recover by 4.7 per cent from 2023 to 2024 to around $702,200, putting it on par with 2022.
Sales activity, historical, forecast and 10-year average (Canadian Real Estate Association)
A final note on average home prices
The report notes that many of the forecast increases and declines in provincial average prices for 2023 and 2024 are more of an echo of the volatility seen last year. In other words, they are likely to have a low signal-to-noise ratio until forecasting 2025.
