Canadian seasonally-adjusted retail sales rose 1.4 per cent in January to $66.4 billion. Sales rose in 7 of 9 subsectors, but were led by higher sales at motor vehicle and parts dealers (+3 per cent) and gasoline and fuel vendors (+2.9 per cent). Core retail sales, which strips out gasoline and motor vehicle and parts dealers, rose 0.5 per cent. In volume terms, sales rose 1.5 per cent in January. As of January 2023, Statistics Canada broadened and modified its definition of Retail Trade, making the current series not precisely comparable with the previous series. 

In BC, seasonally-adjusted sales rose 1.8 per cent in January. Compared to the same month last year, retail sales were up 3.3 per cent in the province. In the Greater Vancouver region, sales rose 3.4 per cent month-over-month and were up 3.2 per cent year-over-year.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian prices, as measured by the Consumer Price Index (CPI), rose 5.2 per cent on a year-over-year basis in February, a decrease from the 5.9 per cent rate in January. This large drop was mostly due to base year effects, as inflation increased strongly this month last year. Grocery prices continue to rise too-quickly, up 10.6 per cent from last year, the seventh consecutive month of double-digit annual price growth. Mortgage interest costs were up 23.9 per cent year-over-year, the fastest pace since 1982, as Canadians renewed or initiated higher-rate mortgages. In contrast, the Homeowner's Replacement Cost, which tracks home prices, continued to slow, increasing 3.3 per cent year-over-year in February, down from 4.3 per cent in January. Month-over-month, on a seasonally-adjusted basis, prices were up 0.1 per cent in February. In BC, consumer prices rose 6.2 per cent year-over-year.

There continue to be encouraging signs that the bout of rapid price appreciation that began in February of last year is waning. Although food prices continue to rise quickly, most other categories in the index are trending back toward normal price trends. The Bank of Canada's measures of core inflation, which strip out volatile components, each ticked downwards for a third month in a row. The three-month annualized change in seasonally-adjusted CPI is now well within the bank's 1-3 per cent target range, hitting 1.6 per cent in February. Although price appreciation may be moderating, it is still well above the Bank of Canada's 2 per cent target, and while the Bank has announced a conditional pause on further rate hikes, they could change course if inflation does not continue to cool. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian housing starts rose 13 per cent to 243,959 units in February at a seasonally-adjusted annual rate (SAAR). Starts were down 2 per cent from February of 2022. Single-detached housing starts rose 2 per cent to 64,281 units, while multi-family and others rose 17 per cent to 179,677 (SAAR). 

In British Columbia, starts fell by 25 per cent in February to 37,389 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts fell 9 per cent m/m to 5,308 units while multi-family starts fell 30 per cent to 28,367 units. Starts in the province were 8 per cent above the levels from February 2022. Starts were up by 1.1k in Kelowna and 1k in Abbotsford, while falling 2k in Victoria and 14k in Vancouver from last month. The 6-month moving average trend fell 3.8 per cent to 48.8k in BC in November. 

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The British Columbia Real Estate Association (BCREA) reports that a total of 4,775 residential unit sales were recorded in Multiple Listing Service^® (MLS^®) systems in February 2023, a decrease of 46.5 per cent from February 2022. The average MLS^® residential price in BC in 2023 was 941,575, down 14.7 per cent compared to the average price of over $1.1 million in February 2022, recorded at the market's peak. The total sales dollar volume was $4.5 billion, representing a 54.4 per cent decrease from the same time in the previous year. 

“While activity across provincial housing markets remains well below normal,” said BCREA Chief Economist Brendon Ogmundson. “There are encouraging signs that the market is balancing out. Home sales rose month-over-month in most markets, and prices appear to be firming up in the face of low supply.”

Worth mentioning, the provincial MLS^® average price was up 8.5 per cent month-over-month to its highest level since July 2022, partially due to a more stable market but also because of the composition of sales reverting to a more normal mix following low sales of single detached homes through the Lower Mainland in January.

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Canadian employment rose slightly to 20.05 million in February, up by 22,000 (0.1 per cent). The Canadian unemployment rate held steady at 5 per cent, hovering just above all-time lows. Employment gains were concentrated in health care and social assistance (+15,000), public administration (+10,000), and utilities (+7,500), while employment fell in business, building and other support services (-11,000). Employment among those aged 55 to 64 rose by 25,000 (+0.7 per cent) as older workers returned to the labour force. Average hourly wages were up 5.4 per cent from February of last year, while total hours worked were up 1.4 per cent year-over-year. 

Employment in BC rose by 6,700 (0.2 per cent) to 2.777 million in February, while Metro Vancouver's employment rose by 0.6 per cent month over month. Both BC and Metro Vancouver's unemployment rates jumped to 5.1 per cent, however. This was driven by an increase in workers entering the labour force, particularly middle-aged females, rather than a decrease in employment. BC's unemployment rate now matches Ontario, while Manitoba, Saskatchewan, and Quebec have a lower rate. 

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The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $1,123,400. This represents a 1.1% increase from Jan 2023 and a 9.3% decrease from February 2022.

Specifically:

- The benchmark price for detached homes increased 0.7% from Jan 2023 and decreased 12% from Feb 2022.

- The benchmark price for townhouses increased 1.8% from Jan 2023 and decreased 6.3% from Feb 2022.

- The benchmark price for apartment/condos increased 1.6% from Jan 2023 and decreased 3% from Feb 2022.

*Areas covered by the Real Estate Board of Greater Vancouver include: Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.

Canadian real GDP declined 0.1 per cent in December, the first monthly decline since January of 2022. The decline in GDP was concentrated among goods-producing industries (-0.6 per cent) while services were flat. Canadian real GDP is now roughly 2.7 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy rose 0.3 per cent in January.

Growth in the fourth quarter of 2022 was nearly unchanged from the prior quarter, following five consecutive quarters of positive growth. Declines in business inventories and business investment balanced out higher consumer and government spending and more favorable net trade. Housing investment fell 2.3 per cent on higher interest rates, as with home renovations (-2.6 per cent), new home construction (-1.4 per cent), and ownership transfer costs (-4 per cent). Overall, housing investment declined 11.1 per cent in 2022. Business investment in non-residential structures, in contrast, rose 2.5 per cent from the prior quarter, with higher investment in engineering structures driven by construction at LNG Canada's export terminal in Kitimat. 

Flat GDP numbers in the fourth quarter continue to indicate slowing in the Canadian economy. Growth in the fourth quarter was softer than expected, providing support for the Bank of Canada's decision to put a 'conditional pause' on further rate hikes as of January. However, with the overnight rate rising 425 basis points in under a year, growth is likely to remain sluggish in the coming quarters as prior rate tightening works its way through the economy.

Copyright British Columbia Real Estate Association. Reprinted with permission.