Home resales are now gradually stabilizing in most parts of the country after plunging through the spring and summer amid soaring interest rates. Nationwide activity even picked up slightly on a month-to-month basis for the second time in three months in December (up 1.3%). This is consistent with our view that a cyclical bottom is approaching\u2014likely in early-2023.<\/p>\n
It will take a little longer for prices to steady though. The MLS Home Price Index for Canada fell sequentially for the 10th-straight month in December (down 1.6% m\/m). We think it will continue to slide until spring at the earliest as poor affordability continues to weigh heavily on buyers.<\/p>\n
The swing in the market over the past year has been nothing short of spectacular. 2022 started extremely overheated as exceptionally low interest rates, changing housing needs and elevated investor involvement supercharged demand. But the Bank of Canada\u2019s aggressive hike campaign beginning in March triggered a massive correction. It resulted in monthly activity falling nearly 40% to the lowest levels in more than a decade (excluding the pandemic lockdown period) by the fall.<\/p>\n