Inventory Challenges: Shaun Cathcart, Senior Economist at CREA, echoed similar sentiments, noting that while the housing market rebound was expected, the challenge lies in the reluctance of existing homeowners to list their properties amidst a slower market. Many homeowners are hesitant to move and disrupt their ultra-low fixed rates secured during the COVID-19 pandemic. This reluctance to list new properties poses a potential challenge to meeting housing demand, which may contribute to further price increases.

Limited Supply and Increased Demand: Although the number of newly listed homes experienced a 6.8% increase between April and May 2023, inventory levels remain historically low. The sales-to-new listings ratio, which measures the balance between supply and demand, saw little change on a month-over-month basis, reaching 67.9%. This level is significantly above the long-term average of 55.1%, indicating continued high demand relative to supply. CREA reported a national inventory level of 3.1 months, down from 3.3 months in April and significantly below the recent peak observed in January. The long-term average for this metric is approximately five months.

Price Trends: The Aggregate Composite MLS Home Price Index experienced a 2.1% month-over-month increase in May, demonstrating significant growth for a single month. This increase was widespread, with price gains observed in the majority of local markets. The index is now 8.6% below year-ago levels, indicating a smaller decline compared to previous months. The national average home price reached $729,000 in May 2023, representing a 3.2% increase from May 2022. This marks the first year-over-year gain in the national average price in 12 months and reflects a recovery of over $116,000 since January 2023. CREA attributes the price growth, to a large extent, to strong sales rebounds in the Greater Toronto Area and the BC Lower Mainland. Excluding these regions, the national average price indicates a decline of nearly $150,000.