SUPPLY CHALLENGES PERSIST INTO THE SPRING MARKET
June 03, 2022
For immediate release:
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.”
You will notice a change in the benchmark home price this month. Benchmark home prices reflect a typical home to ensure price movements better reflect market activity. Over time the typical home evolves and the MLS® Home Price Index also evolves to ensure the data remains in line with modern housing trends. As of June 1, the benchmark price was recalculated based on a modern typical home. Details on the model adjustments made can be found here .
Sales trended up compared to earlier in the year for most of the regions in the province. While province wide sales were still lower than last year’s record levels, there was year-over-year growth in Moose Jaw, Regina and Yorkton which all recorded new highs for the month. The sales gains in May for those areas were not enough to offset earlier pullbacks, but it is important to note that every region in the province continues to report year-to-date sales that are stronger or consistent with long term trends.
After the first five months of the year, most regions continue to face market conditions that were generally tighter than last year. However, the most notable exception is in North Battleford. While inventory levels have eased in the region, the pullback in sales has been more significant causing the months of supply to generally rise. Despite the gains in this region conditions are still tighter than long-term trends supporting year-to-date price growth.
Despite generally tighter market conditions, residential benchmark prices have trended down for the areas of Moose Jaw, Swift Current, North Battleford, and Yorkton in May. Despite some slowing on a year-to-date basis, prices generally remain higher across all the regions except Moose Jaw. Moose Jaw saw some downward pressuring on prices at the end of 2021. While prices in Moose Jaw have generally been trending up in 2022 for detached homes and are comparable to the highpoint of 2021, lower prices earlier in the year are pulling down the year-to-date prices.
Steady price growth as led to new high prices in many of the larger centres in the province. However, on a year-to-date basis prices have yet to fully recover from previous highs in Estevan, Swift Current, Weyburn and Moose Jaw.
City of Saskatoon
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.
City of Regina
Sales in Regina not only trended up from earlier in the year but reached a record high for the month of May. The growth was enough to push year-to-date sales to an all-new record high at 1,615 sales. Improving economic activity has supporting growth in the employment market so far this year boosting confidence and demand in the housing market.
The improvement in sales outpaced the growth in new listings and inventory levels fell compared to both last year’s levels and long-term trends. This also caused the months of supply to ease from levels reported earlier in the year. The months of supply has remained below three months for the past three months, something that has not happened since 2012.
The tight market conditions have been placing upward pressure on prices and in May the benchmark price reached $328,200, nearly four per cent higher than levels reported last year and a new record high for the city. The price growth has been driven by the single-family market as condominium prices have yet to recover from the previous highs set in 2015.