Home sales bounced back by 57 per cent from their worst April in more than 30 years last month, but the average price of a home sold in May still inched lower compared to last year.
The Canadian Real Estate Association, which represents 130,000 realtors across Canada and tabulates numbers based on sales on their Multiple Listings Service, says home sales were 56.9 per cent higher in May than they were in April.
April and May are typically a very busy month for home sales, as warmer weather prompts buyers to start shopping after their winter hibernation. But COVID-19 has thrown the usual seasonal patterns of real estate out the window, as widespread lockdowns and physical distancing requirements slowed most showings to a crawl.
This April was the worst such month in almost 40 years for home sales, CREA reported last month. Activity picked up a little in May, but the sales level is still just two-thirds what it was before the pandemic struck.
Indeed, sales are still almost 40 per cent below what they were this time last year. So despite the rebound, it was still the worst May for home sales in 30 years, CREA said.
“May’s housing numbers are certainly a mixed bag of results,” CREA’s chief economist Shaun Cathcart said. “Sales and new listings are both way up month-over-month but still way down compared to year ago.”
“The big picture is things are moving in the right direction but still have a long way to go.”
While home sales have fallen off a cliff during COVID-19, prices are holding relatively steady so far. The average price of a home sold in April was $488,000. In May, it was $494,500 — a slight increase from April but 2.6 per cent lower than a year earlier.
Real estate experts, including CREA, say average prices aren’t always the best way to gauge the overall health of the market, mainly because sales in big markets tend to skew the numbers, and that’s especially true in the age of COVID-19.
Sales were up by more than 50 per cent in Toronto from April’s low level, by more than 90 per cent in Montreal and by more than 30 per cent in Vancouver. Houses in those cities tend to cost more than in other areas, so the average of all sales could have easily been dragged higher as a result.
If Toronto and Vancouver are stripped out of the numbers, the average selling price was $401,000 in May.
“Because the level of transactions is still so low, average price data should be taken with a large grain of salt,” TD Bank economist Rishi Sondhi said.
“With the level of activity still at multi-decade lows, pent-up demand is likely to fuel additional gains for at least another few months [but] the big question is what happens after this initial burst.”
BMO economist Robert Kavcic also says it’s too soon to tell how the housing market is responding to COVID-19. “It’s easy to post gaudy percentage increases coming off what was effectively a shut-down market in April,” he said in an email report to clients.
“The speed at which new listings come to the market in the months ahead, versus how much pent-up demand there is (or how much demand is destructed by the pandemic), will ultimately dictate … price action, which to date has held relatively steady.”