Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Housing activity eased in April for a fifth consecutive month. The decline in sales is mainly due to BC and Alberta, while sales in Ontario rose after months of decline. Nevertheless, the number of housing transactions in Ontario remains close to its lowest since the early days of the pandemic. With lower sales, inventories are rising in Canada to their highest level since the pandemic, leading to some decline in prices nationally.
The elevated uncertainty caused by the US tariff threat and the increased likelihood of a recession in Canada is clearly holding back the housing market. The impact is particularly visible in markets where affordability is very low, offsetting the impact of lower interest rates. The weakness has mainly affected Ontario, with the number of transactions having dropped by more than 30% since November and the month-of-supply measure of inventories at its highest since the Fall of 2009 during the Global Financial Crisis.
With uncertainty remaining elevated and a weakening labour market suggests that further easing in the housing market is likely in the coming months. However, lower interest rates, better affordability and demography could provide support in some markets. The speed of the slowdown in the housing market will likely be determined by whether weaker growth translates into further layoffs and the magnitude of job losses.
In Alberta, housing market activity remained robust by historical standards, despite some slowing in recent months. We note that Edmonton continues to outperform Calgary, with the provincial capital amongst the strongest housing markets in Canada. Strong migration into Alberta and affordability are significant supports for housing activity and prices compared to elsewhere in the country. However, the poor performance of the labour market since the start of the year could be a drag.
Activity in the Canadian housing market eased by 0.1% m-o-m seasonally-adjusted in April, a fifth consecutive month of decline. The number of transactions, at 35.8k, is its lowest level since November 2023, and 7.5% lower than for the same month in the preceding years. The decline in activity in April was mainly the result of a drop in activity in BC (-2.3% m-o-m), Alberta (-3.4% m-o-m), Saskatchewan (-6.3%m-o-m) and PEI (-6.5% m-o-m). On the flip side, activity increased in New Brunswick (+5.2% m-o-m), Manitoba (+3.3% m-o-m), Quebec (+2.0% m-o-m), and Newfoundland (+1.9% m-o-m). After four consecutive months of sizeable declines, activity in Ontario rose 1.1% m-o-m.
Compared to the average level of 2019, the number of transactions is about 14% lower nationally but continues to be well above its pre-pandemic level in Newfoundland (+46%), Alberta (+38%), and Saskatchewan (+33%). On the flip side, activity is well below pre-pandemic in Ontario (-38%), BC (-17%) and Nova Scotia (-10%).
New listings eased 1.0% m-o-m seasonally-adjusted in April, after a an increase in March, and were 4.6% higher compared to the prior year. The decrease in new listings was seen in most provinces led by PEI (-6.4% m-o-m), Nova Scotia (-4.3% m-o-m), Newfoundland (-3.9% m-o-m) and BC (-3.0% m-o-m). On the flip side, new listings increased in Quebec (+4.9% m-o-m) and Saskatchewan (+1.3% m-o-m).
Despite sales activity being weaker than new listings in many regions, the month-of-supply measure[1] rose to 5.1 nationally, on par with its 2019 level. Based on this measure, the changes in inventories at the provincial level were mixed. Inventories rose the most in PEI, BC, and Saskatchewan, while they declined in Newfoundland, Manitoba, and New Brunswick.
Inventories are the lowest in Manitoba (2.0 months), Alberta (2.9 months), and Saskatchewan, while they are the highest in BC (7.8 months), PEI (6.8 months), Ontario (6.0 months), and Newfoundland (5.0 months).
Compared to 2019, inventories in Ontario are 3.6 months higher and 2.3 months higher in BC, while they remain well below in Newfoundland (-10.3 months), and Saskatchewan (-7.1 months)
With a month-of-supply at 2.9, Alberta’s housing market remains well below historical standards.
With weak sales and higher inventories, the MLS House Price Index decreased 1.2% m-o-m in April. Compared to the previous year, house prices nationally were lower by 3.4% y-o-y.
The biggest monthly price increases were in Saskatchewan (+0.8% m-o-m), Newfoundland (+0.7% m-o-m), and Quebec (+0.6% m-o-m. Prices decreased the most in Ontario (-2.2% m-o-m), PEI (-1.1% m-o-m), Manitoba (-0.9% m-o-m), and BC (-0.8% m-o-m).
On a y-o-y basis, Ontario (-6.6% y-o-y), BC (-1.3% y-o-y), and PEI (-0.1% -o-y) were the only provinces where prices declined. Prices increased the most in Quebec (+9.2% y-o-y), Newfoundland (+8.0% y-o-y), Manitoba (+8.0%), and New Brunswick (+7.8% y-o-y).
Compared to their recent peaks in early 2022, prices have declined by 17.7% nationally. However, prices are still about 26% higher than in January 2020 on the eve of the pandemic. Compared to their recent peak, prices dropped the most in Ontario (-23.9%) and BC (-8.7%). On the flip side, prices are higher in New Brunswick (+19.3%), Newfoundland (+19.0%) Alberta (+113.4%), and Saskatchewan (+11.2%).
In Alberta, benchmark prices were unchanged m-o-m and are up 4.8% y-o-y. Prices in Calgary eased 0.1% m-o-m (+1.7% y-o-y) while increasing 0.7% m-o-m in Edmonton (+12.6% y-o-y). Edmonton has been outperforming relative to Calgary for some months. Strong population growth and better affordability could explain the better performance in Edmonton.
In Alberta, sales activity declined 9.9% y-o-y in April, but the housing market remains robust with transactions still well above their pre-pandemic level. Nevertheless, the performance in April at the regional level was mostly positive compared to the same month last year. (see table below for details).
On a 3-month moving average of the year-on-year, transactions decreased 9.2% in the province, with strong increases in Alberta West (+18.7%), Grande Prairie (+13.8%), Fort McMurray (+12.8%), and Lloydminster (+4.0%), and. On the flip side, activity was lower in Calgary (-17.3%), South Central Alberta (-11.3%), Central Alberta (-10.3%) and Edmonton (-5.4% y-o-y).
Compared to the average level of transactions in 2019, activity in the province increased by 38%, led by Lloydminster (+68%), Edmonton (50%), Central Alberta (+41%), and Fort McMurray (+35%).
New listings were higher than last year at the provincial level (10.4%). However, there are some significant differences regionally. On a 3-month moving average of the year-on-year, new listings increased the most in Calgary (+20.7%), Central Alberta (+9.7%), Lethbridge (+7.9%), and Alberta West (+6.2%). New listings declined the most over the same period in Fort McMurray (-2.7%), and Medicine Hat (-0.4%).
With sales below new listings in April, some regions saw a an easing in market conditions. The primary seller’s markets are Lethbridge, Medicine Hat, Lloydminster and Grande Prairie. The main buyer’s market is Calgary.
Average house prices in the province increased by 5.9% on a 3-month moving average of the year-on-year in the province. Prices are higher in all regions, except for South Central Alberta (-7.5%). Prices rose the most in Grande Prairie (+17.6%), Alberta west (+16.5%), Medicine Hat (+13.3%), and Lethbridge (+10.4%).
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Independent Opinion
The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any organization or person in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication.