Real estate report: Second highest home price increase ever recorded in a single month

Home costs posted the second-highest enhance ever recorded in a single month after the one noticed in July 2006, based on the newest Teranet-National Bank composite index.

The index for July was up 2.4 per cent from June, after seasonal changes, and marked the fourth consecutive month-to-month rise.

After declining from a peak in April 2022 as the upper fee surroundings sidelined some patrons, current rises within the house worth composite index have erased a few of this correction, the report mentioned.

“The deep declines that we saw through 2022 are largely being unwound,” mentioned Douglas Porter, the Bank of Montreal’s chief economist.

The Teranet-National Bank index tends to lag different housing market measures partially as a result of it is extra detailed, he famous.

Other measures are beginning to present some softening out there over the summer time, and Porter thinks that softening will start to indicate up on this index going ahead as properly.

“I think what we’re going to see is that this may be the last hurrah for a while for home prices,” he mentioned.

July house gross sales noticed their largest annualized enhance in additional than two years, the Canadian Real Estate Association reported Tuesday. But they had been little modified from June because the nationwide housing market confirmed indicators of stabilizing this summer time, the affiliation mentioned.

Prices may proceed climbing within the third quarter of the 12 months, supported by robust demographic development and low provide, wrote National Bank of Canada economist Daren King within the report.

“The deterioration in affordability with recent interest rate hikes in a less buoyant economic context should represent a headwind for house prices thereafter,” King wrote.

Porter agreed with King that the housing market will face extra headwinds because the 12 months progresses, although excessive immigration will assist assist costs.

Expectations for rates of interest are more and more that they’ll stay larger for longer, mentioned Porter, which shall be a stress on the housing market over the long term.

Though mortgage curiosity prices are contributing to the Consumer Price Index in an “unfortunate side effect” of the central financial institution’s combat towards inflation, Porter mentioned issues can be way more dire if the central financial institution hadn’t raised charges.

“You can’t just look at the impact on mortgage interest costs in isolation, you have to look at the overall picture,” he mentioned. “The overall picture is showing that inflation and even underlying inflation has come down over the last year.”

Eight of the 11 markets within the Teranet-National Bank composite index had been up in July, with Halifax up probably the most at 4.9 per cent. Vancouver gained 3.9 per cent, whereas Toronto added 3.5 per cent.

Prices fell 1.2 per cent in Quebec City, 0.9 per cent in Montreal and 0.3 per cent in Calgary.

Compared with a 12 months earlier, the general composite index in July was down 1.9 per cent.

This report by The Canadian Press was first printed Aug. 18, 2023.