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Home sales change little in August

 16 September 2015      

OTTAWA (15 September 2015) - The housing resale market was a little quieter in August, with national sales posting only a 0.3% uptick over July, although actual sales were 4.0% higher than in August 2014, according to the latest figures published by the Canadian Real Estate Association (CREA).

The realtors' group noted sales were evenly split between markets posting increases and those with declines.

"August marked the fourth month in a row for strong and stable national sales activity," said CREA president Pauline Aunger.

Chart courtesy of the Can
Chart courtesy of the Canadian Real Estate Association.

"Prices continue to rise in Ontario and British Columbia, where listings are either in short supply or heading in that direction," added CREA chief economist Gregory Klump. "August also provided early evidence that modest price growth is re-emerging in some markets in Quebec and New Brunswick. The continuation of low interest rates is supporting home sales and price trends, and is likely to keep doing so for some time."

Actual sales activity in August 2015 was up 4.0% over the same month last year and was the third highest August sales figure on record after 2005 and 2007. It also stood 6.6% above the ten-year average for August.

Actual sales were in a little over 60% of all local markets, led by the Lower Mainland region of British Columbia and the Greater Toronto Area (GTA). Sales in Calgary continued to post the largest year-over-year declines after having run near record levels there last year.

The number of newly listed homes edged up by 0.5% in August compared to July, led by gains in Edmonton and the GTA.

The actual (not seasonally adjusted) national average price for homes sold in August 2015 was $433,367, up 8.7% on a year-over-year basis.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are among Canada's most active and expensive housing markets. If these two markets are excluded from calculations, the average is a more modest $338,755 and the year-over-year gain is reduced to 4.2%.

What the experts sayOutside observers, such as Diana Petramala of TD Economics, continue to believe the housing market won't continue to grow at its current pace for much longer even though she pointed out in a note to clients that it "has outperformed general economic conditions through the first half of the year."

Even though the Canadian economy has fallen in a "technical recession", both housing resales and construction continue to top long-run averages.

"While most of the strength in Canada's hottest housing markets can be attributed to the drop in interest rates at the start of the year, it has generally been viewed as unsustainable," she said, adding, "And, momentum from lower interest rates is starting to fade - particularly in markets whose fortunes are heavily tied to commodity prices. Overall, we continue to expect a few more month of above average activity, but then the lagged effects of weaker economic conditions are likely to catch up to housing activity in the fall months."

Petramala noted the correction in Calgary and Edmonton has not run its course and prices could come under further pressure through the end of 2015 and into 2016.

"The surge in market activity through the first half of 2015 has helped to absorb some of the abundant supply of condos on the market in both Ontario and British Columbia," she said. "As such, while annual price growth is expected to moderate to a more sustainable 3% to 4% pace next year, as more balanced market conditions and healthier economies help avoid a deeper slowdown in home sales and prices."

Chart courtesy of the Can
Chart courtesy of the Canadian Real Estate Association.

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