Thanks to a boost in new listings compared to earlier in the year, sales activity in May reached 541 units. While sales this month and on a year-to-date bases have eased compared to last year, sales are still amongst the highest levels seen and well above long term trends.
Sales activity has likely been restricted in this market due to the supply levels. While new listings and inventories did improve from levels seen earlier this year, they are still far lower than long-term trends and the months of supply fell to just over two months, the lowest level seen since early 2008. The tight conditions are mostly being driven by the detached and attached segments of the market.
With a market that generally favours the seller, there continues to be upward pressure on prices. Benchmark prices have reported steady monthly gains for eight consecutive months and as of May were over four per cent higher than levels reported last year.
While higher lending rate are expected to impact demand in coming months and recent gains in starts should help with overall housing supply, it will take time before we see more balanced conditions play out in the Saskatoon market.
Unlike some areas of the country, sales activity in May trended up relative to levels seen earlier in the year. With 1,814 sales this month, levels are still slightly lower than last year’s record, but remain well above typical activity in May. Year-to-date sales have totaled 6,682 units, down 11 per cent from last year’s record high, but over 27 per cent higher than long-term trends.
“While demand for homes in Saskatchewan has remained relatively strong so far this year, we did not go through the same early demand surge as some markets. In fact, our market is exhibiting trends that we typically see in the Spring. What we are still struggling with is lower supply levels, which is keeping conditions relatively tight and causing further upward pressure on prices,” comments Chris Guérette, CEO of Saskatchewan REALTORS® Association.
In May, new listings did trend up relative to earlier months and was slightly higher than levels reported last year. This helped push inventory levels above 6,000 units, but inventories are still nearly 20 per cent lower than last year’s levels and 30 per cent below long-term trends for the month.
Despite some shifts in supply, the market continues to remain exceptionally tight with less than four months of supply, something not seen since 2008. The tighter market conditions are placing further upward pressure on home prices. As of May, the benchmark price in the province reached $330,300, nearly one per cent higher than last month and four per cent higher than last year’s levels.
“Rising lending rates are expected to have some cooling impacts on housing demand. While sales activity could be impacted in coming months, it will take some time for the market to return to more balanced conditions. Our recent report in partnership with the Saskatchewan Housing Continuum Network titled Saskatchewan’s Current Housing Continuum outlines the significant number of homes our province needs to build in the next seven years, so we don’t fall behind.” said Guérette. “The next step will be to undertake research and recommend targeted policies that foster building and smart growth.”