Toronto’s housing market slowed in June for the first time in five months as a largely unexpected rate hike by the Bank of Canada appeared to scare off some potential buyers.
(Bloomberg) — Toronto’s housing market slowed in June for the first time in five months as a largely unexpected rate hike by the Bank of Canada appeared to scare off some potential buyers.
The number of homes sold in Canada’s financial capital fell 6.9% from May, according to seasonally adjusted data released Thursday by the Toronto Regional Real Estate Board.
A shortage of homes for sale meant the benchmark price continued to climb 2.5% in June to C$1.16 million (about $875,000). However, monthly price growth decelerated from May.
The Bank of Canada resumed its rate-hiking campaign on June 7 with a surprise quarter percentage point move to try to contain excess demand, citing the unexpected strength in the national housing market and concerns about inflation. It warned of the possibility of further hikes and markets are pricing in at least one more this year, which would put upward pressure on mortgage rates.
“A resilient economy, tight labor market and record population growth kept home sales well above last year’s lows,” TRREB Chief Market Analyst Jason Mercer said in a statement. “Looking forward, the Bank of Canada’s interest rate decision this month and its guidance on inflation and borrowing costs for the remainder of 2023 will help us understand how much sales and price will recover beyond current levels.”
The central bank’s next interest rate decision is scheduled for July 12.
Even as sales dipped, the pace of new listings held steady from May, bumping the total active listings on the Toronto market by 19% to 14,107.
Trends in the Vancouver area mirrored those in Toronto, with the first month-over-month decline in home sales since January, according to a report from the Real Estate Board of Greater Vancouver. Home prices rose 1.3% from May, the group said.
Home prices have also been pushed up by a population boom and a materials shortage that caused a gauge of residential construction prices to rise 51% since the first quarter of 2020, according to Royal Bank of Canada.
–With assistance from Ari Altstedter.
(Updates with Bank of Canada date in sixth paragraph, Vancouver data in seventh paragraph.)
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