Home sales across Canada plunged 57% year-over-year in April to their lowest level since 1984, while the average house price fell back below $500,000, according to the Canadian Real Estate Association (CREA).

When compared to March figures⁠—which were already weakened as the impacts of the COVID-19 pandemic began to be felt⁠—sales were down 56.8%. The month-over-month drop-off in sales was seen in all markets, including the country’s largest centres:

• −66.2% in the Greater Toronto Area
• −64.4% in Montreal
• −57.9% in Greater Vancouver
• −54.8% in the Fraser Valley
• −53.1% in Calgary
• −42% in Edmonton
• −59.8% in Winnipeg
• −51.5% in Ottawa

“Like so many other parts of normal daily life, a lot of buying and selling activity in housing markets across Canada has been put on pause,” noted CREA’s Senior Economist, Shaun Cathcart.

New listings fell by 55.7% compared to March, nearly in lock-step with the decline in sales. That kept the sales-to-new listings ratio (an important measure of market balance) stable, falling to just 62.4% compared to 64% in March.

“The fact both sides of the demand-supply equation fell in virtually equal proportions…revealed an important characteristic of COVID-19,” RBC economist Robert Hogue wrote. “To date, it hasn’t created market imbalances.”

Home Prices Down, Inventory Up

The average (not-seasonally adjusted) house price in April fell to $488,000, its first time below $500,000 since August. That represents a modest 1.3% decline compared to April 2019, but a significant 10% contraction compared to March 2020. This is the largest month-over-month price decline, according to CREA records that date back to 1980. The only other monthly decline to rival it was a 7.6% drop in April 1989.

Removing the Greater Vancouver and Toronto areas from the equation, the national home price would stand at $392,000.

“In the months ahead, the extent to which sales fluctuate in these two markets in particular could have large effects on the national average price, both on the way down and the way back up,” CREA noted.

With the sudden drop in home sales seen across the country, CREA’s measure of housing inventory more than doubled in April to 9.2 months from 4.2 months in March. This means that if sales continued at their current pace, it would take over nine months to liquidate all housing inventory.

CREA notes that this figure should start to decline as active listings are withdrawn or allowed to expire. “Anecdotal evidence suggests many sellers who already had homes on the market before mid-March may have left the listings up for now, but drastically curtailed the extent to which they were actively trying to sell during the lockdown,” CREA said.

Despite the declines in home sales, new listings and prices, there is optimism for activity to start to come back online in the coming months.

“Preliminary data for May suggest things may have already started to pick up a bit for both sales and new listings, in line with evidence that new and existing virtual technology tools have been adopted by Realtors and their clients,” Cathcart said. “These tools have allowed quite a bit of essential business to safely continue, and will likely remain key for some time.”

However, RBC expects demand-supply conditions to deteriorate  and “downward price pressure” by the second half of 2020 as economic hardship persists and government support programs (including mortgage payment deferrals) start to end.

“The (economic) shock is likely taking an enormous toll on the next cohort of first-time homebuyers, whose ability to save for a down payment has been impaired,” Hogue noted. “Many of them have lost their job or seen their work hours reduced significantly. Economic hardship is also no doubt taking a toll on a number of current homeowners.”