Home sales and prices continued to moderate in May, easing from March’s peak. But with ongoing tight supply and high demand, prices are expected to remain elevated through the year.

That’s according to the Canadian Real Estate Association (CREA), which released its updated outlook for average prices to post a 19.3% annualized gain to $677,775. That’s expected to be followed by a much more moderate 0.6% annual price gain in 2022.

“…activity will remain strong through 2021, resulting in a record number of sales this year despite the slowdown that began in April.,” CREA said. “Over time, activity is forecast to continue returning towards more typical levels. As a result, 2022 is expected to see significantly fewer MLS transactions than in 2021 while nonetheless still marking the second-best year on record.”

In May, Canada’s average home price (not seasonally adjusted) was $688,208 in May, up 38.4% year-over-year, but down nearly 4% compared to March. Removing the high-priced markets of the Greater Toronto and Vancouver areas, the average price still stands at $548,208, up 36.8% from last year.

Housing inventory continued to rise slowly, reaching 2.1 months in May, up from the record low of 1.7 months set in March. Compare that to the long-term average of more than five months. Housing inventory is the amount of time it would take to liquidate current inventories at today’s rate of sales.

“More and more, there is anecdotal evidence of offer fatigue and frustration among buyers, and the urgency to lock down a place to ride out COVID would also be expected to fade at this point given where we are with the pandemic,” said Cliff Stevenson, Chair of CREA.

Cross-Country Roundup of Home Prices

As price gains eased in many of the major markets, one region in Ontario’s cottage country bucked the trend. The Lakelands region, comprising Parry Sound, Muskoka, Haliburton and Orillia, posted an average price of $601,300, up 48.7% compared to last year but also up 6% from April. Other regions, including Southern Georgian Bay and Kawartha Lakes, saw their average prices eke out only slight gains of 0.5% and 0.4%, respectively, compared to April.

Here’s a look at some more regional and local housing market results for April:

• Ontario: $866,307 (+37.6%)
• Quebec: $449,698 (+28.6%)
• B.C.: $916,741 (+26.2%)
• Alberta: $442,808 (+19.2%)
• Barrie & District: $718,800 (+37.8%)
• Ottawa: $653,600 (+34.4%)
• Halifax-Dartmouth: $466,633 (+29%)
• Greater Montreal Area: $496,600 (+28.6%)
• Winnipeg: $319,900 (+15.2)
• Victoria: $810,400 (+14.2%)
• Greater Vancouver Area: $1,172,800 (+14%)
• Calgary: $441,600 (+11.3%)
• Edmonton: $343,300 (+8.5%)
• St. John’s: $274,700 (+5.6%)

Peak Prices Could Still be Ahead

May marked the second-straight monthly decline in home resales, largely because buyers are having difficulty finding the property they want within their budget.

But prices are still moving upwards, just more slowly compared to earlier in the year, as we noted above. And there still looks like room to grow, at least until the end of the year, according to some observers.

“While there may have been fewer buyers participating in them, bidding wars were still the norm in most markets,” wrote RBC economist Robert Hogue. “Strong competition between buyers is keeping intense upward pressure on property values at this stage. We’ll need to see a much more significant market rebalancing before prices can stabilize. We expect this to occur late this year at the earliest.”

May’s data also showed that condos are coming back into favour, given their increasing share in price growth.

“Though overshadowed by the super-heated detached market, condos are quietly making a comeback,” wrote TD Bank economist Rishi Sondhi, pointing out that condo price gains in the last three months are the strongest since 2017. “Should condo sales consume a rising share of the market moving forward (as we expect), downward pressure on average home prices from these lower-priced units would be applied.”