Housing sales are down in N.L., but Realtor association CEO says prices aren't likely to follow

Newfoundland and Labrador's housing sales are starting to cool off, according to the annual report published by the provincial Realtor association. 

The number of homes sold through the MLS system totalled 554 units in July, declining 21.1 per cent from July 2022. Year-to-date home sales totalled 2,712 units over the first seven months of this year, a decrease of 23.9 per cent from the same period in 2022.

"We've just come off of what I would call two uncharacteristically busy years, not only in Newfoundland and Labrador but right across the country," Bill Stirling, chief executive officer of the Newfoundland and Labrador Association of Realtors, said Thursday.

"The pandemic years, for whatever reason, drove real estate activity right across the country. We're starting to see those kinds of sales levels return to a more normal pattern."

But even with sales starting to slow down, Stirling said, the province is still between 20 or 30 per cent above pre-pandemic years.

"So the market is still strong. There's lots of demand out there," he said. One of the challenges right now is relatively low inventory, he added. "People can't sell what's not there, so we're seeing sales levels start to drop off."

New home construction is also slowing, contributing to the lack of inventory.

Inflation has increased costs, Stirling said, making building a new home increasingly expensive.

"The Bank of Canada wanted to cool the Canadian housing market, and they've been very successful in doing that," he said.

"Interest rates are significantly higher than what they were a year ago, so that's impacting first-time home buyers in what they qualify for in terms of a mortgage but it's also making buyers kind of sit on the sidelines to wait until rates at least stabilize or start to come down."

Stirling said demand is also starting to slow while Newfoundland and Labrador's population has grown, which is raising prices. 

The rest of country saw large price spikes after the pandemic hit that have since fallen by 20 to 30 per cent, Stirling said, but that hasn't happened in Newfoundland and Labrador.

"Our situation has been one of slow, moderated, steady increase in values over the last three years. So it's much more stable," he said.

To look at the impact of inflation on home prices, the Realtor association uses its own metric, called the home price index — similar to the consumer price index, which measures inflation.