The BC housing market appears to be stabilizing after a year and a half of volatility induced by the B20 mortgage stress test and other policy measures. Total MLS® unit sales are on pace to finish 2019 at just under 75,000 units, a 5 per cent decline from 2018. Home sales posted a sharp rebound over the summer, buttressed by strong employment growth and a decline in mortgage rates. We expect that most markets will normalize around long-term averages in 2020, with total provincial sales reaching 82,710 units.

Growth in the BC economy is projected to slow for a second consecutive year in 2019. A policy driven slowdown in housing activity, a challenging global trade environment and cautious consumer spending have provincial real GDP on pace to grow at about 2.2 per cent this year. Our baseline forecast is for slightly improved economic growth at 2.5 per cent in 2020, as spending on LNG projects ramp up and the impacts of restrictive mortgage credit begin to fade. There remains significant downside risk around this forecast, however, given the uncertain economic outlook in the United States.

Housing starts in the province were much higher than anticipated through the first half of 2019 as some construction activity in the Metro Vancouver area was pushed forward to avoid higher development costs slated to be implemented in the back half of the year. While we do expect the pace of new home construction to moderate, the large pipeline of units under construction ensures that markets will be well supplied in the short-run. A recovery in home sales has slowed the accumulation of resale inventory, with active listings still well short of the previous peak in 2012. That leaves market conditions at the provincial level essentially balanced with little upward pressure on prices. We anticipate that the MLS® average price will decline 2.3 per cent in 2019 before rising modestly by 3.2 per cent to $718,000 in 2020.