CMHC: Housing markets to moderate from historic 2021 levels
Starts and sales expected to slow, but not below historic averages; prices likely to remain elevated.
Canada Mortgage and Housing Corporation (CMHC) expects the level of home sales and the pace of price growth to remain elevated in 2022 compared to long run averages but will moderate from their respective 2021 peaks. In its most recent Housing Market Outlook report, CMHC says that these trends will continue to 2024, reflecting the impact of higher mortgage rates and lower housing affordability on housing demand.
The national housing agency expects housing sales and price growth to fall more in line with historical averages by late 2023 or early 2024, but elevated price levels will persist since price growth will remain positive. These factors, it warns, will place greater pressure on the affordability of entering homeownership.
Recent rental market trends are also expected to continue over the forecast period. Downward pressure on rental vacancy rates and upward pressure on average rents will likely continue to affect rental affordability.
Housing starts will also moderate from 2021 highs but remain above historical averages. This reflects expected support for new home construction to address current and growing housing supply gaps.
“Improving levels of employment and immigration are expected to be key factors, as the impact of pandemic restrictions continue to recede,” stated Bob Dugan, chief economist for CMHC. “In 2023 and 2024, the growth in prices will trend closer to long-run averages, with sales and starts activity expected to remain above five- and 10-year averages.”
Over the course of 2022, CMHC will be publishing a series of reports to help deepen its understanding of housing supply challenges in Canada and to ultimately inform better policies and decision making.