There are tentative signs that the worst might be over for Canada’s embattled housing sector.
New data shows that Canadian home prices may have bottomed in February after the Bank of Canada said it plans to pause its interest rate increases and assess their impact on the economy.
The average home price in Canada fell 1.1% in February from January to $704,300. That was the smallest monthly decline since March 2021, according to the Canadian Real Estate Association (CREA).
The rapid rise in interest rates over the last year led to one of the fastest declines in Canadian homes values and sales on record.
Home sales in the key markets of Toronto, Calgary, and Vancouver each fell 47% in February from a year earlier.
But now that the Bank of Canada has paused its interest rate hikes, the housing market appears to be stabilizing.
The number of home sales recorded nationwide in February rose 2.3% from the previous month, said CREA.
Separately, Canada Mortgage and Housing Corp. (CMHC) reported that the annual pace of housing starts across the country increased 13% in February.
The national housing agency that is based in Ottawa said the annual rate of housing starts during February totaled 243,959 units compared with 216,514 in January of this year.
The annual rate of urban housing starts rose 16% to 222,663 units in February, while the rate of multi-unit urban starts increased 18% and rural housing starts totaled 21,296 units.
However, the six-month average of monthly housing starts was 255,735 in February, down 2% from 259,830 units in January, said CMHC.
While the Bank of Canada has stopped raising interest rates, it has yet to cut them and the average mortgage rate in the country is currently above 6% and near all-time highs.