House prices bounced up 6.5% in June compared to last year, CREA says

Canada's housing market showed signs of recuperation from COVID-19 last month, with prices and sales numbers well up from where they were a year earlier.

The Canadian Real Estate Association said Wednesday that the average price of a Canadian resale home was $539,000, up 6.5 per cent from the average price a year earlier. And it's up by more than 10 per cent from what it was just one month earlier, in May.

Canada's housing market went into a deep freeze when pandemic-related lockdowns began in March, causing activity in March and April to fall to record lows.

But sales picked up in May as restrictions eased, and that momentum seems to have followed through into June.

A total of 41,628 homes changed hands during the month, an increase of 63 per cent from May's level, and a jump of more than 15 per cent compared to June 2019.

Sales were up in Canada's biggest cities compared to May:

• Toronto, up 83.8 per cent.
• Montreal, up 75.1 per cent.
• Greater Vancouver, up 60.3 per cent.
• B.C.'s Fraser Valley, up 99.7 per cent. 
• Calgary, up 54.9 per cent.
• Edmonton, up 59 per cent. 
• Winnipeg, up 22.5 per cent.
• Hamilton-Burlington, Ont., up 34.8 per cent.
• Halifax-Dartmouth, up 55 per cent.
• London and St. Thomas, Ont., up 67.9 per cent.
• Ottawa, up 55.6 per cent.
• Quebec City, up 43.6 per cent.

CREA's chief economist Shaun Cathcart said the market has recovered "much faster than many would have thought, but what happens later this year remains a big question mark.

"That said, daily tracking suggests that July, at least, will be even stronger."

Prices, on average, were double-digits higher in fifteen of the 26 biggest markets in Canada, compared to where they were a year ago.

CREA says the average price figure can be misleading because it can be easily skewed by sales in big and expensive markets like Toronto and Vancouver. So the group calculates another number, known as the House Price Index, which strips out those effects and adjusts for the mix of different homes in different markets.

The HPI went up at an annual rate of 5.4 per cent in June, CREA said.

"Generally speaking, prices are re-accelerating east of Manitoba with the exception of Toronto for now," CREA said. "B.C. prices are also picking up with the exception of Vancouver. Home prices are declining in Calgary, while elsewhere on the Prairies prices are either flat or rising."

Economist Doug Porter with Bank of Montreal says the numbers were undeniably strong, but it's still unclear as to whether they are just a temporary blip.

"Home sales, prices and starts have effectively regained all the ground lost during the shutdown," he said. 

"However, fair point that some of this outsized strength is simply pent-up demand for the lost sales from the key spring season, and it remains to be seen if the momentum can be maintained."

Rishi Sondhi with TD Bank said booming sales of high-end homes are a sign that moneyed buyers have indeed returned, for now.

"There was a resurgence in activity in the high end of the market," he said.  "This reinforces the notion that markets are getting stronger, as it's not just low-priced inventory that's moving."

Still, he says he has his doubts that the strong showing can continue, given the economic headwinds that Canada is facing from COVID-19.

"In our view, as long as unemployment is elevated, population growth slows, and CMHC measures remain in place, growth in home sales and prices is likely to be subdued after this initial burst."