Home Sales Activity Remaining Strong

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service (MLS) Systems of Canadian real estate boards and associations. Current trends and the outlook for housing market fundamentals suggest activity will remain strong through 2021, resulting in a record number of sales. That said, activity is forecast to begin returning to more typical levels over time. 2022 is expected to see fewer MLS transactions compared to 2021, while remaining above all other years on record. Over the past several years, record levels of international immigration (not including 2020), low interest rates, and an increasingly middle-aged Millennial cohort have all fueled strong household formation and housing demand in Canada. Some 701,000 properties are forecast to trade hands via Canadian MLS systems in 2021. The strength of demand is geographically broad-based and CREA anticipates double-digit sales growth in every province. While CREA's previous forecast was also for a record number of sales in 2021, activity has been much stronger than expected and this represents a large upward revision resulting from the incredible growth in sales over that last number of months. For reference, the new all-time monthly record set in February 2021 was over 783,000 sales on a seasonally adjusted annual basis. On a monthly and quarterly basis, sales are forecast to begin trending down towards more typical levels through the latter half of 2021 and into 2022. Limited supply and higher prices are expected to tap the brakes on activity in 2022 compared to 2021, although increased churn in resale markets resulting from the COVID-related shake-up to so many people's lives will likely continue to boost activity above what was normal before COVID-19. Indeed, it is possible that many of the moves associated with changes related to increased remote work won't play out until a little further down the road providing more certainty about what the future will look like post-COVID. National home sales are forecast to fall by 12.6 per cent to around 614,000 units in 2022. This easing trend is expected to play out across Canada as higher prices and a lack of available supply impacts all areas of the country, as previously pent-up demand is exhausted and as the urgency to purchase a home base to ride out the pandemic fades along with the virus itself.