Its newest housing market outlookThe association said it expects 532,545 properties to change hands through Canada’s MLS system this year, down 20% from the annual record in 2021.
The national median home price is forecast to increase 4.7% to $720,255.
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The outlook is down from a June CREA forecast that predicts a 14.7% drop in sales this year and a 10.8% increase in median home prices nationally.
The updated forecast comes as CREA said August home sales were down 1% from July and 24.7% lower than August last year.
The national median home price was $637,673 in August, down 3.9% from the same month last year.
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“August saw nationwide sales hold steady monthly for the first time since February, which, along with stabilization of supply/demand conditions in many markets, could be an early sign shows a sharp correction this year in the housing market across Canada. Jill Oudil, president of CREA, said in a statement.
Several markets, including Toronto, have seen housing cooled in recent months as rising interest rates and mortgage rates take a toll on sales and begin to weigh on price.
The rate hike has quelled the unruly bidding wars that raged in many markets in the winter and encouraged potential buyers to wait for more prices to fall.
Oudil believes many stocks will not be pushed into the market, despite some recent declines.
“Some buyers may choose to stay on the sidelines until they see clearer signs of borrowing costs and prices stabilizing,” she said.
Ahead of the CREA data release, BMO Capital Markets senior economist Robert Kavcic said the housing sector is facing a “unique” situation as many potential buyers have been pre-approved from prior to the Bank of Canada tightening and currently on 10 to 20% off. about housing.
“If you can buy at a discount with mortgage rates that no longer exist, that could be very attractive,” he wrote in a Wednesday note to investors.
“But the bigger picture is that there is still a huge interest rate shock to absorb.”
The last time in a year, he added, increased the realized cost of an average home purchase in Ontario was in the late 1980s.
“In other words, this is the strongest housing tightening in a generation and it will require further adjustment.”
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