With 1,547 sales this month, activity slowed compared to the record high set last April. Despite the slower sales seen in the first four months of this year, it is noteworthy that those 4,873 sales are 30 per cent higher than longer term trends.
“While rising lending rates are likely contributing to some of the pullback in sales, another challenge limiting sales has been the drop in supply choice, especially in the larger markets of the province,” said SRA CEO, Chris Guérette.
New listings in April were 18 per cent lower than last year’s levels and inventories remained 20 per cent lower than last April and over 30 per cent below long-term trends. Lower levels of sales and lower inventory levels prevented any notable change in the months of supply, which remained below four months.
“The months of supply number is an important gage of supply and demand balance in the market and current levels are far lower than what we would expect to see in the market at this time of year. While conditions have been tighter historically, we have not seen market conditions like this for over a decade and it is resulting in further price growth,” said Guérette.
Residential benchmark prices rose to $295,000 in April, two per cent higher than last month and a four per cent gain over last year. Prices have trended up over the past two years and as of this month have reached a new monthly record high for the province.
“Consumers purchasing budgets are shrinking, and the Bank of Canada rate increase has pushed up the mortgage stress test’s qualifying rate. That is going to remove strained buyers from the market, and it’s going to reduce the size of mortgage those who still qualify can get,” said Guérette. “While Saskatchewan still offers some of the most affordable housing in the country, affordability will continue to deteriorate and could lead to a slow-down of the market, despite the many initiatives included in the recent federal budget.”
Further reductions in April sales have contributed to the year-to-date sales decline of 13 per cent in Saskatoon. However, with 1,513 sales so far this year, this is still far higher than long term averages. Higher lending rates should cool some of the housing demand this year, but sales activity in Saskatoon has also been impacted by a challenging supply scenario. In April, new listings were a mere 665 units, 30 per cent lower than last April and over 18 per cent below typical levels seen at this time of year. The drop in new listings relative to the sales has caused further reductions in inventory levels and ensured the market continues to favour the seller with only two months of supply.
Both Inventories and the months of supply have not been this low for the month of April since 2008. The tighter conditions in the market are weighing on home prices. The benchmark price in April rose to $338,500 reflecting a year-over-year gain of over three per cent and representing a new record high. While price gains have occurred both in the single family and condominium market, year-to-date condominium prices remain below previous highs reported back in 2015.