Canadian home prices continue to plunge in June as higher rates pinch

The frenzy of the start of 2022 has faded, with sales down 19% in the second quarter from the first. New listings rose 4.1% in June

The price of a resale home in Canada fell 1.8% in June from last year, the first annual decline since May 2020, as the market continued to cool sharply from February's peak amid tighter borrowing conditions,  Qazet.az reports according to Reuters.

Canada's national average selling price fell to C$665,850 ($511,092) in June from C$678,280 in the same month of 2020, data from the Canadian Real Estate Association showed. Prices are down 6.4% on the month and down 18.5% from February's peak.

"The June housing data show a market seriously wobbling, and that was before the Bank of Canada’s 100-bp knockout blow," said Robert Kavcic, senior economist at BMO Economics, in a note, adding an even deeper correction is yet to come.

Home sales in Canada fell 5.6% in June from May and are down 23.9% year-over-year, led by Canada's largest cities, the CREA said.

"Sales activity continues to slow in the face of rising interest rates and uncertainty," said Jill Oudil, chair of the CREA. "The cost of borrowing has overtaken supply as the dominant factor affecting housing markets at the moment."