May sales activity continues to ease with the largest declines occurring in the detached sector. Additional gains in new listings continue to increase inventory levels.
City-wide sales activity in May totaled 1,726 units and is 19 per cent below last years' levels. This is 24 per cent below longer term averages. Sales activity in the detached sector declined to levels not seen in over a decade.
"The impact of rising lending rates and stricter qualification levels is causing demand to ease across all product types," said CREB® chief economist Ann-Marie Lurie.
"Economic conditions have improved compared to several years ago, but the pace of economic recovery has not been enough to outweigh the changes in lending conditions."
Market supply has not adjusted to sales activity and is pushing months of supply to 4.9 months. Elevated supply relative to demand prevented any further price recovery in the market and city-wide residential benchmark prices totaled $436,900 in May. This is similar to last month and 0.6 per cent below levels recorded last year.
Detached sales and inventories have risen across all price ranges, but the amount of excess supply has been most notable for homes price above $500,000. Months of supply for the higher price ranges remain high compared to the past several years. However, they still remain below record levels that occurred post financial crisis (2008 – 2009).
"The changes in the lending market are preventing some people from moving up in the market. Uncertainty has also caused others to wait on making changes to their housing situation," said CREB® president Tom Westcott.
"However, there are pockets of the market that have not seen the same supply increase. It makes it so important to understand the dynamics of your community."