From CREB: October 22, 2019 – Third-quarter activity continues to show signs of improvement. Similar to last quarter, much of the improvement in the market has been driven by supply adjustments.
However, the housing market has also benefited from stronger year-over-year gains in sales activity this quarter. Price declines have likely contributed to some of the demand growth. Also, sales growth has been driven by product priced under $500,000.
“This is a market with divergent trends. The lower end of the market is recording improving sales and easing supply. This is supporting more stability in prices. However, at the higher end of the market we continue to see slower sales and rising supply,” said CREB® chief economist Ann-Marie Lurie.
“Persistent struggles in the overall economy have caused a shift in salary expectations, along with adjustments in housing demand. Improvements in the lower end of the market will eventually impact higher price ranges, but we are still in a buyers’ market. We are facing enough economic risk that it will prolong the time it takes to move the entire market to more stable conditions.”
Supply continues to adjust in the resale market, mostly due to reductions in new listings. Easing starts and lower vacancy rates are also helping reduce overall supply levels. These supply adjustments will help support more stability in prices, but often move at a slower pace compared to supply reductions driven by demand growth.
Nonetheless, the easing supply compared to sales is helping push the market toward more balanced conditions and reducing the level of price declines. Prices continue to remain nearly three per cent lower than last year’s levels, but the pace of decline is easing, and third-quarter prices remained relatively stable compared to second-quarter figures. While we are far from price recovery, pressure on prices should ease if these adjustments continue.
Three things to know about the 2019 third-quarter market update:
- Sales activity improved by 6.75 per cent compared to last year, driven by gains in the under-$500,000 segment.
- On average, inventories declined by nearly 14 per cent compared to last year.
- The third-quarter benchmark price was $425,533. This is a decline of 2.74 per cent year-over-year, but a 0.31 per cent increase quarter-over-quarter.