Seasonally adjusted sales declined 1.8% in May from the previous month, according to Toronto Regional Real Estate Board (TRREB) data. Average home prices increased 0.3% to C$1.11 million ($811,760), the highest since December, while new listings were up 2.6%.
Home sales rose in December and January but have since been declining, as the Bank of Canada signaled it needed more evidence that inflation was cooling sufficiently before starting to lower its policy rate from a more-than-two-decade high of 5%.
TRREB in a statement did not provide an explanation for the fall in sales in May, though it has previously said monthly figures can be volatile when the market is approaching a transition point.
The central bank’s next rate decision is scheduled to be announced at 9:45 a.m. (1345 GMT) on Wednesday, when financial markets and economists see a strong chance of a 25 basis point cut.
On a year-over-year basis, home sales were down 21.7% in May, while the average selling price was 2.5% lower. New listings were up 21.1% annually, which TRREB said was a sign that existing homeowners were anticipating an uptick in demand.
“While interest rates remained high in May, home buyers did continue to benefit from slightly lower selling prices compared to last year,” TRREB Chief Market Analyst Jason Mercer (NASDAQ:MERC) said in the statement.
“Affordability is expected to improve further as borrowing costs trend lower. However, as demand picks up, we will likely see renewed upward pressure on home prices as competition between buyers increases,” Mercer added.
($1 = 1.3674 Canadian dollars)
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