2018 hasn’t been kind to the Canadian real estate market so far — national home sales dropped steeply in January, and remained weak in February. According to a new report from RBC, it will be awhile before most markets get back on their feet.

“The notion that the new stress test for uninsured mortgages would slow down Canada’s housing market is getting more and more currency,” writes RBC senior economist Robert Hogue. “After a sharp drop in January, home resale activity was weak again in February.”

Hogue notes that while Toronto and Vancouver activity have slumped, data from other local real estate boards suggests the dip in activity was a “cross-Canada affair.”

Sales in Calgary dropped 18% year-over-year, while Victoria saw a drop of 19%. While Montreal saw a 5% year-over-year gain, sales were down from their 13% increase in January.

Meanwhile in Toronto, year-over-year sales dropped 25%, a serious decline from where the market sat this time last year.

“According to our rough calculations, this will translate into an eight-year low on a seasonally-adjusted basis,” writes Hogue. “The benchmark price further decelerated to an annual rate of increase of 3.2% — the slowest in nearly five years.”

In Vancouver the story was similar — sales fell 9% year-over-year in February.

“We estimate that this corresponds to a second-straight double-digit monthly decline on a seasonally-adjusted basis,” writes Hogue.

But Hogue also believes that the market should start to recover in coming months, citing upward price pressure in the Vancouver market and a uptick in listings in both Toronto and Vancouver last month.

“It’s worth noting that sellers warmed up to the market,” he writes. “New listings rose in February in both Toronto and Vancouver after declining markedly in January. This could be an early sign of a pick-up in buyer activity in the coming months.”

As Sales Plunge, Canada’s Housing Market Struggles to Adjust to New Mortgage Rules by Sarah Niedoba | Buzz Buzz Home