Home sales fell 14% in March as COVID-19 settled in, CREA says

Home sales fell by 14 per cent in March as COVID-19 lockdowns slowed the market to a crawl, the Canadian Real Estate Association says.

The group that represents 130,000 real estate agents across the country said Wednesday that the month started out strong but slowed dramatically in the second half, "as the economic turmoil and physical distancing rules surrounding the COVID-19 pandemic caused both buyers and sellers to increasingly retreat to the sidelines."

Sales were down just about everywhere from February's level, including in the following cities:

• Greater Toronto Area, down 20.8 per cent.
• Montreal, down 13.3 per cent.
• Greater Vancouver Area, down 2.9 per cent.
• Fraser Valley, down 13.6 per cent.
• Calgary, down 26.3 per cent.
• Edmonton, down 13.2 per cent.
• Winnipeg, down 7.3 per cent.
• Hamilton-Burlington, down 24.9 per cent.
• Ottawa, down 7.9 per cent.

"March 2020 will be remembered around the planet for a long time," CREA president Jason Stephen said. "Canadian home sales and listings were increasing heading into what was expected to be a busy spring [but] after Friday the 13th, everything went sideways."

Average sale price largely unchanged from February

The month started out strong and then completely froze in the second half, which threw the overall monthly figure out of whack, said CREA's senior economist Shaun Cathcart.

"Preliminary data from the first week of April suggest both sales and new listings were only about half of what would be normal for that time of year," he said.

On the price side, the average sale price for a home that sold during the month was just over $540,000. That's basically unchanged from the average selling price in February, but is up by 12.5 per cent compared to the average seen in March 2019.

Prices are withstanding the slowdown for now because there's so much pent-up demand for housing, said Phil Soper, CEO of real estate firm Royal LePage.

"You need an imbalance," he said in an interview. "You need many more people trying to sell than to buy for prices to really change to the negative."

But if sales stay low, TD Bank economist Rishi Sondhi said it is inevitable that prices eventually have to come down, too.

"Listings have cratered alongside sales, as pandemic pressures have forced potential sellers to the sidelines," he said.

"This is keeping markets balanced and maintaining a floor on prices. … However, the longer economic weakness lingers, the greater the chance that households are forced to list their properties. Such an outcome would put downward pressure on prices."

Bank of Montreal economist Robert Kavcic agrees that prices can't be immune to a real estate slowdown forever, so the impact depends on how long this one lasts.

"There's no doubt that residential real estate activity has fallen sharply, to at least half of normal levels," he said. "The longer the shutdown … lasts, the more likely prices are to start falling. But for now, the market looks to be effectively on hold as listings are falling too, and support measures aim to prevent forced selling."