Home Sales To Moderate

With economic growth, employment, and net migration helping Canada recover from losses incurred during the COVID-19 pandemic, home sales will moderate from unsustainable 2020 levels, but remain elevated, says the Canada Mortgage and Housing Corporation (CMHC) ‘Housing Market Outlook.’ The outlook anticipate emerging trends in new home and resale housing markets at the national level and for Canada's 18 largest census metropolitan areas (CMAs). "COVID-19 has had unprecedented impacts on Canada's urban centres. While some sectors of the economy have struggled to adapt to pandemic conditions, housing activity has been strong and somewhat disconnected from overall economic and employment conditions in many centres," says Bob Dugan, CMHC's chief economist. “However, significant risks remain with respect to the path, timing, and sustainability of the recovery." The outlook assumes the five-year mortgage rate will increase, but remain very low by historical standards until the end of 2023. It's not certain if the shift toward work-from-home arrangements, which is a factor in driving housing demand from more expensive CMAs to less expensive markets, will persist after the pandemic, causing risk to the forecast. It says economic growth, employment, and net migration will gradually return to pre-COVID levels over the 2021 to 2023 period, as broad immunity to COVID-19 takes hold and restrictions are lifted in Canada and globally. The pace of sales is expected to moderate from recent highs, reflecting high price levels on existing-home markets, the impact of increasing mortgage rates, and low inventories of homes for sale. The ratio of single-detached housing starts to total starts will increase through 2021, reflecting the shift in preference toward single-detached units on the resale market, as indicated by their current low inventories and strong price growth.