Home sales begin to rise after COVID-19 collapse

Lower Mainland home sales rose in May following April’s COVID-19-caused collapse, but activity remained low as economic and public health concerns kept buyers and sellers on the sidelines.

Sales in the Metro Vancouver/Abbotsford-Mission area reached 2,272 units, a 45% year-over-year decline. That said, a 20% rebound in seasonally adjusted sales from April point to improvement. Levels remained half of pre-COVID-19 levels.

Some sellers returned to the market but new listings were sharply below normal levels. Seasonally adjusted new listings rose 60% month-to-month but were 30% below a year ago, led by single-detached units. Pivots by realtors using virtual showing technology, increased sanitization processes and a potential move to the exits by some investors likely contributed to the increase.

Despite an uptick, the sales-to-active listing ratio rebounded closer to balanced conditions at about 14% during the month. Sales-to-active listings ratios were highest for townhomes (20%) and apartments (14%), with detached units at 12%, and contributed to relatively steady price levels.

The average Multiple Listing Service price rose 0.7% following a 4.2% decline in April. This was a less-than-normal May increase, pointing to weaker price conditions. The benchmark housing price index values fell 0.1%, led by a slip in apartment values.

As the phased re-start gathers steam, housing market activity will follow. That said, elevated unemployment and low population growth will limit the rebound. Low interest rates and relatively stable labour market conditions for higher-income-earning households will support demand, but we expect further price declines in the 5% to 10% range through 2020.

The Canadian labour market unwound a small portion of COVID-19 job losses in May amid partial easing of public-health restrictions and reopening of more non-essential businesses.

Nationally, Labour Force Survey employment rose 1.8%, marking the largest monthly gain on record, but it recaptured only about 10% of losses over the prior two months and remained 14% lower than February levels. The average unemployment rate rose to a record high of 13.7%.

B.C. employment rose by 43,300 or 2% to 2.185 million persons. Compared with February, employment was still down by 14%. Gains were driven entirely by full-time work, which rose 3.2%, as part-time employment declined 3%. Increased hours for many individuals likely contributed to this shift.

A surge in labour force participation, which rose from 58.2% to 60.6% drove the unemployment rate up to 13.4% from 11.5% in April.

 Bryan Yu is deputy chief economist at Central 1 Credit Union.