Home sales hold steady
OTTAWA – Home sales via its Multiple Listing Service (MLS) was essentially unchanged in June, according to the latest report from the Canadian Real Estate Association (CREA). When compared to May, they slid a barely noticeable 0.2% but advanced an extremely modest 0.3% on a year-over-year basis.
The realtors’ group noted while national activity ran close to its ten-year average last month and was up almost 10% from the six-year low reach this past February, it remains well below the level recorded over much of 2015, 2016 and 2017.
CREA also observed there is an increasing divide between the regional markets across the country. June’s results were caused by an even split between the number of local markets were up and those where they were down. Larger gains were focused in Quebec and southern Ontario, which were offset by declines in a diverse mix of markets including the Greater Vancouver Area (GVA), Calgary, Halifax-Dartmouth and the province of Newfoundland & Labrador.
Actual sales edged up 0.3% compared to June 2018, with gains in Greater Toronto (GTA) and Montreal offsetting declines in British Columbia.
“There’s a growing divergence in Canadian housing market trends between eastern and western Canada,” CREA chief economist Gregory Klump said in a statement. “While sales activity in Canada’s three westernmost provinces appear to have stopped deteriorating, it will be some time before supply and demand there becomes better balanced and the outlook for home prices improves.”
The number of newly listed homes edged up 0.8% in June, prompting the national sales-to-new listings ratio to ease to 57.1% in June from 57.7% posted in May – close to its long-term average of 53.5%.
CREA also reported there were five months of inventory on a national basis at the end of June 2019. While this is its lowest level since January 2018, this measure of market balance remains close to long-term average of 5.3 months.\
However, while national measures of market balance are close to their long-term averages, there are significant regional variations.
The number of months of inventory has swollen far beyond long-term averages in the Prairie provinces and Newfoundland & Labrador, giving homebuyers ample choice in these regions. By contrast, the measure remains well below long-term averages in Ontario and the Maritime provinces, resulting in increased competition among buyers for listings and fertile ground for price gains.
The actual national average price for homes sold in June 2019 was just under $505,500, up 1.7% from the same month in 2018.
The national average price is heavily skewed by sales in the GVA and GTA, Canada’s most active and expensive housing markets. Excluding them trims the national average price to just under $400,000.
In his research note, Rishi Sondhi of TD Economics, said the modest breather the market took in June was not all that surprising given the strong gains made in prior months, even though mortgage rates edged lower in the month.
“Moving forward, home sales will likely continue to trend higher in the second half, supported by a solid job market, strong population growth, low borrowing costs, further distance from past restrictive policies and supportive measures for first-time homebuyers,” he said.
He added CREA’s report caps a decent second quarter for housing activity, with sales rising 5% from their weather-impacted first quarter drop. This should give overall economic growth a boost and lays a good foundation for improvement in the second half of the year.