The number of new listings on the Canadian MLS could be meek this spring, paving the way for record demand to clash with record-low supply.

“The stat to watch in 2021 will be new listings, particularly in the spring—how many existing owners will put their homes up for sale?” Shaun Cathcart, senior economist at the Canadian Real Estate Association (CREA), said in a statement. “We already have record-setting sales, but we know demand is much stronger than those numbers suggest because we can see it impacting prices. On New Year’s Day, there were fewer than 100,000 residential listings on all Canadian MLS Systems, the lowest ever based on records going back three decades.”

Exactly five years earlier, on the other hand, there were around 250,000 sales listings on the MLS.

“So we have record-high demand and record-low supply to start the year. How that plays out in the sales and price data will depend on how many homes become available to buy in the months ahead. Ideally, we’d like for households to be able to find and acquire the homes that best suit their needs and for housing to remain affordable, but the fact is we’re facing a major supply problem in 2021.”

Sales activity was nevertheless robust in Greater Toronto and Vancouver last month, helping set a national record for the month, according to CREA data. Transactions rose by 7.2% last month from November, but the country’s two most expensive markets witnessed monthly gains of 20%.

Moreover, actual sales activity in Canada surged by 47.2% year-over-year in December—an 11-year high—as CREA recorded more than 12,000 transactions in the country. December also marked the sixth consecutive month of year-on-year sales increases.

In 2020, there were 551,392 home sales recorded in Canada’s MLS, which broke the previous record set in 2016 by 2.3%, for a 12.6% increase over 2019. According to Costa Poulopoulos, CREA’s chair, the national housing market will carry the momentum it has built into this year.

However, as Cathcart alluded to, inventory is dwindling. At the beginning of this month, there were only 2.1 months of inventory nationwide, which is an all-time low, and 29 Ontario markets had under a month’s worth of inventory. "While momentum continues into 2021, surging COVID cases and a return to April-like lockdowns in some provinces means we’ll be revisiting some of those virtual technology solutions to process deals in the first few months of the year,” said Poulopoulos. “Hopefully we’ll have the current wave more under control by the time the spring market rolls around, which is shaping up to be a very active one.”