Canadian Real Estate Markets Show Signs of Recovery

On Wednesday, March 15, the Canadian Real Estate Association (CREA) released its national housing statistics for the month of February 2023. Below, CREA’s Senior Economist Shaun Cathcart provides an update on the current state of housing markets in Canada and explains what the data means for members:

We’ve been wondering for a few months whether—and to what extent—2023 would be a recovery year for housing markets following a steep drop-off in 2022, albeit from a lofty start.

Our forecast, published back in January, predicted a modest recovery or the start of a recovery, but forecasts are by their very nature always conservative.

A great example of a recovery year is 2019, coming off the stress test in 2018. It started off slow but there were no listings. Sellers were waiting for spring. This year is looking increasingly similar.

February 2023 saw the same month-over-month drop in seasonally adjusted new listings that we saw in February 2019. This is not a market being flooded with listings. Quite the opposite.

From a demand vs. supply standpoint, we’re still in (or close to being in) a seller’s market at the national level. Future sellers, many of whom will also be buyers, are going to bide their time until the optimal window to list and buy something else. For most, that’s means the spring.

But that doesn’t mean we have to wait months for some encouraging signs. There were a number of green shoots evident in the February data. Nothing earth-shattering, but that’s what green shoots means: the start of something or turning a corner toward recovery.

I’ve already mentioned the biggest month-over-month increase in sales since last year’s rate tightening cycle by the Bank of Canada and associated real estate market adjustment began.

What else? Let’s go down the list.

Sales-to-new listings ratio

This February, the sales-to-new listings ratio tightened considerably, from a little over 50% for most of the last year to a little under 60%, or from below average to above average in the space of a month.

Months of inventory

The number of months of inventory also dipped last month from 4.2 months to 4.1 months. That’s the first decline in that measure since the fall of 2021 and it’s also still a full month below its long-term average.


Tighter market conditions should help to firm up prices, which some buyers are no doubt waiting to see before they enter the market. And we’re already seeing evidence of prices firming.

The average home price bounced up by more than $50,000 in February compared to January, although that was due to sales (not price) gains in the pricey Toronto and Vancouver markets. When you suddenly get a few more transactions for more than $1 million showing up in the sample, it makes the average go up. Averages are often more noise than signal.

MLS® Home Price Index

Even the all-signal no-noise MLS® Home Price Index saw its month-over-month decline shrink from January to February, posting the smallest decline since prices first started falling last spring.

It’s only one month, so it’s not a trend yet, and these may be modest improvements at this point, but they were very broad-based. Green shoots all over the place in February which bodes well for the months ahead.

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As our Director and Senior Economist, Housing Data and Market Analysis, Shaun Cathcart provides housing market intelligence to Boards, Associations, members, and real estate industry stakeholders. He spends much of his time analyzing and writing about Canadian housing trends. In his downtime, you can find him on his bike, on the volleyball court, and enjoying time with his family.

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