Home sales fall in September
OTTAWA – National home sales via its Multiple Listing Service (MLS) eased 0.4% in September when compared to August, marking the first decline since April, according to the latest data from the Canadian Real Estate Association (CREA).
The realtors’ group noted while sales activity is still somewhat stronger compared to the first half of this year, it remains well below most other months since 2014.
It added sales declined from August to September in slightly more than half of all local markets, led by Vancouver Island and Edmonton, along with several markets in Ontario’s Greater Golden Horseshoe (GGH) region. These declines were offset by monthly gains in the Fraser Valley and Montreal.
About 70% of local markets were down on a y-o-y basis, led primarily by declines in major urban centres in British Columbia, along with Calgary, Edmonton and Winnipeg.
The number of newly listed homes rose 3% between August and September, led by the Lower Mainland and the Greater Toronto Area (GTA). More than half of all local markets posted a monthly increase in new listings. These were offset by declines – often greater than 3% – in the remaining local markets.
“Sales activity may get all the press but it’s the balance between that and the number of homes for sale that sets the tone for pricing environment,” CREA chief economist Gregory Klump said in a statement. “In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price. However, in places where buyers are keen to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price. It will be interesting to see how supply and demand respond to rising interest rates amid this year’s new mortgage stress-test.”
With sales down slightly and new listings up, the national sales-to-new listings ratio eased to 54.4% in September compared to 56.2% in July and August. The long-term average for this measure of market balance is 53.4%.
By this standard, CREA said about three-quarters of all local markets were in balanced market territory in September 2018.
The association also noted at the current rate of sale, it would take 5.3 months to sell off all listed properties. While in line with the long-term national average, this is well above the long-term average in the Prairie provinces and in Newfoundland & Labrador.
The actual national average price for homes sold in September 2018 was just under $487,000 – virtually unchanged from the same month last year.
Excluding Canada’s two most active and expensive markets – the Greater Vancouver Area and the Greater Toronto Area – cuts almost $104,000 from the national average, trimming it to just over $383,000.
In his research note, Rishi Sondhi of TD Economics said the broad picture of improvement in the housing market – from the weakness forced by new government mortgage regulations imposed earlier this year – is still intact and September’s report should be seen as a setback on the road to recovery.
“Looking at the past few months, sales posted relatively solid gains in June and July, driven by a rush of pent-up demand as markets adjusted to the updated B-20 lending guidelines,’ he said. “However, activity has eased considerably since then. This is consistent with our forecast calling for resale activity to rise at a more moderate pace in coming quarters, as increasing borrowing costs and stretched affordability conditions in key markets keep a lid on demand.”