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April home sales plunged to levels not seen in almost 40 years on COVID-19 impacts

May 15, 2020

OTTAWA — Canadian home sales plunged to levels not seen in almost 40 years in April as the COVID-19 outbreak forced distancing measures and created economic uncertainty.

Home sales were down 57.6 per cent from a year earlier to 20,630 sales for the month, while seasonally adjusted sales were down 56.8 from March as home buyers and sellers stayed home.

The levels of activity were the lowest since 1984, the Canadian Real Estate Association said Friday.

“Never in our recent history have we dealt with such widespread effects of a pandemic that limit everyone’s day-to-day life and have forced all of us to pivot and adjust to our new reality,” said Costa Poulopoulos, association chairman, in a release.

Activity was down 66.2 per cent in the Greater Toronto Area, 57.9 per cent in Greater Vancouver, 51.5 per cent in Ottawa, and 42 per cent in Winnipeg.

The overall drop blew through the previous record year-over-year drop of 46.7 per cent in April 1982, said TD senior economist Brian DePratto in a note.

“April’s data confirmed what we were all expecting, namely that the pandemic drove sales to historically depressed levels.”

DePratto said markets are, however, starting to show signs of renewed life.

“We do expect sales to remain depressed for a few months longer as job markets slowly improve and buyers remain cautious, but a normalization process is likely already underway.”

CREA also said sales look to have already started to pick up in May, aided by virtual viewing tools that have allowed for more remote buying and selling.

New listings of 35,795 were down by 59.5 per cent compared with a year earlier, and down a seasonally adjusted 55.7 per cent from March.

Despite the listings drop, inventory levels jumped to 9.2 months in April compared with 4.3 months in March as older listings stayed active while sales fell.

The drop in new listings also kept the sales-to-listing ratio in what’s normally considered favourable to sellers at 62.4 per cent, but BMO senior economist Robert Kavcic notes that such indicators aren’t as helpful in the current situation.

“When the market has effectively frozen, these metrics become a bit less reliable,” he said in a note.

He said the question now is how the market will evolve as activity returns; whether federal and mortgage support programs are enough to limit forced selling and whether investors look to get out of the market.

“It’s going to be a race between sales and listings out of the gate to determine how the market balance shapes up, and where prices move in the near-term.”

So far prices haven’t seen much movement. The composite benchmark price was down 0.6 per cent in April compared with March for the first decline since last May, but is still up 6.4 per cent year over year.

Some areas still saw month-over-month price gains in the index, including Ottawa and parts of southwest Ontario, but Greater Toronto, and much of Western Canada saw declines.

The national average price for homes sold in April was more than $488,000, down 1.3 per cent from the same month last year. Excluding the high-priced Toronto and Vancouver area markets, the average price was less than $392,000.

This report by The Canadian Press was first published May 15, 2020.