The floor under Canada's hardest-hit housing markets might be firming, even if the country is still unlikely to see a charged rebound, said Bank of Montreal (BMO).
The bank continues to see a long evolution in this housing cycle, and it appears that the price destruction phase is running its course, at least for single-family homes. Canada could now be settling into a phase where pent-up demand meets lower prices to bring volumes back.
This was always going to happen first for single-family and BMO has some early signs that the country has hit that checkpoint. A return to firm price growth is still some time off, and the condo market is a different, weaker animal altogether.
Existing home sales were down 5.1% year over year in May, but improved a "solid" 5.5% in seasonally-adjusted terms from the prior month. The combination of pent-up demand and a gradual relenting on price by sellers should start to bring volumes back into the market, and May's result might be some evidence of that, stated the bank.
New listings were down 1% in the month, or 7.9% from a year ago, which is helping keep the market in balance overall, it pointed out. The national sales-to-new listings ratio improved to 49.2% from 46.2% in the prior month, while the months' supply of homes on the market backed down after rising for most of the past year.
The national benchmark price was down 3.9% from a year ago, but declines are moderating. On a month-to-month basis, the benchmark price was down 0.1%, or 1.3% annualized, in seasonally-adjusted terms, while the three-month annualized decline has moderated to -2.6% from near-7% earlier in the year.