CMHC says home price and sales growth to moderate but stay elevated

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Growth in housing sales, prices and construction will moderate this year from pandemic highs but stay elevated, supported by a strong economy, job market and immigration, Canada’s housing agency said Thursday.

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“In 2023 and 2024, the growth in prices will trend closer to long-run averages with sales and starts activity expected to remain above 5- and 10-year averages,” said Canada Mortgage and Housing Corp. (CMHC) chief economist Bob Dugan in the outlook report.

“Price growth will likely continue to be led by markets with low listings, including Vancouver, Toronto, and Montreal.”

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The CMHC outlook report comes amid signs of cooling from a hot pandemic market where the average cost of a home rose more than 50 per cent over the past two years.

In March, the average home price fell 2.5 per cent from February and sales were down 5.4 per cent, Canadian Real Estate Association data showed Tuesday.

Some expect even deeper declines to come as the Bank of Canada raises interest rates to deal with soaring inflation.

Expectations of a more aggressive rate path prompted RBC this week to cut its housing forecasts. It now sees home sales falling 13 per cent this year and another 14 per cent in 2023.

RBC sees prices peaking this spring and then weakening modestly over the rest of the year.

The CMHC said housing affordability will continue to decline with growth in home prices outpacing incomes.