Home sales in Canada plummeted 40 per cent last month compared with a year ago, with new listings and prices also dropping in what one economist called “hints of a bottoming process.”

The plunge in sales came as prices declined 18.9 per cent compared with the all-time record posted in February 2022, the Canadian Real Estate Association said Wednesday.

The actual average home price in Canada was $662,437 in February, down from $816,578 a year earlier, the association said, referring to figures that had not been seasonally adjusted.

Compared with January, CREA said national home sales rose 2.3 per cent in February, powered by gains in Toronto and Vancouver, while the number of newly listed properties dropped 7.9 per cent month over month.

The drop in transactions in February brought sales in line with what was recorded in 2018 and 2019, suggesting the rise in interest rates over the past year “has blown off some of the pandemic era froth in Canada’s housing market,” BMO chief economist Douglas Porter said.

Despite sluggish sales last month, he said market dynamics showed signs of improvement in February.

“Canadian existing home sales activity remained deep in the doldrums in February, although there are hints of a bottoming process,” Porter said in a client note.

“There are signs that sales activity and prices may be close to a nadir,” he said. “The recent sudden plunge in global bond yields, alongside the Bank of Canada’s step to the sidelines, looks to provide some support for housing, as does the ongoing job market strength.”

Still, while prices have softened to some degree almost everywhere across Canada, Calgary, Regina, Saskatoon, and St. John’s stand out as markets where home prices are barely off their peaks, the real estate association said.

Overall, prices began to stabilize last fall in the Maritimes, and some markets in Ontario seem to be doing the same now, the association said.

Jill Oudil, chair of the real estate association, said February’s data suggests the potential for a more robust market to come.

“But to repeat the bottom line from last month, we won’t know what the 2023 market has in store until the spring,” she said in a statement.

“While we’re not seeing it in the sales or listings data just yet, I would expect homeowners are getting properties ready for the market and prospective buyers are getting mortgage pre-approvals.”

Shaun Cathcart, the association’s senior economist, said similarities between 2023 and 2019 continued to emerge in February, with sales up, the market tightening, and month-over-month price declines getting smaller.

“But the biggest similarity was a sharp drop in seasonally adjusted new listings,” he said. “Future sellers, many of whom will also be buyers, are likely bidding their time until the optimum time to list and buy something else.

“For most, that’s in the spring,” Cathcart said. “Will buyers jump off the fence to snap homes up in 2023 once they finally start to hit the market? They did in 2019.”

This report by The Canadian Press was first published March 15, 2023.

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