MLS sales jump in October
OTTAWA – Actual housing sales via its Multiple Listing Service were up 32.1% in October, according to figures released by the Canadian Real Estate Association (CREA), which hailed the uptick as “historically strong”. The number of new listing also rose, as did the national average selling price.
The realtors’ group also reported national sales fell 0.7% on a month-over-month in October 2020, with sales gains recorded in about half of all local markets including Montreal, the Fraser Valley, Calgary and Edmonton. These were offset by declines in the Greater Toronto Area (GTA), Hamilton-Burlington, Ottawa and the Greater Vancouver Area (GVA).
CREA said October set a new record for housing sales by a margin of more than 14,000 transactions. “For the fourth straight month, sales activity was up in almost all Canadian housing markets compared to the same month in 2019,” its report noted, adding, “Among the few markets that were down on a year-over-year basis, it is possible the handful that are in Ontario simply do not have the supply at the moment.”
So far this year, some 461,818 homes have traded hands over Canadian MLS® Systems, up 8.6% from the first 10 months of 2019. In fact, it was the second-highest January-October sales figure on record, trailing only 2016.
“Many Canadian housing markets continue to see historically strong levels of activity, and at this point over and above what would have been required to make up for the very quiet spring market this year,” CREA chairman Costa Poulopoulos said.
“For anyone waiting for the Canadian existing home market to begin to settle down following this summer’s surprisingly strong recovery, they’re going to have to wait a little longer. It was evident that the same trends we’ve been seeing since July – record sales and record prices amid tight overall supply – was once again the story in October,” CREA senior economist Shaun Cathcart remarked.
“As we’ve moved through the last few months of headline-grabbing data, we’ve seen sales activity for the year-to-date not just catch up with last year, which was surprising enough, but at this point activity in 2020 has a real shot at setting an annual record,” he continued, adding, “Many reasons have been suggested for why this is when many traditional drivers of the market, economic growth, employment and confidence in particular, are currently so weak. Something worth considering is how many households are choosing to pull up stakes and move as a result of COVID-19 and all the associated changes to our lives. We could be seeing a lot of moves, or churn in the market, that would not have happened in a non-COVID world.”
The number of newly listed homes climbed 2.9% in October. The overall gain in new supply in October was driven by more new listings in the GTA, B.C.’s Lower Mainland and Ottawa. As with sales, actual new listings set a record for the month although by far less a margin, meaning market conditions are remain tight in many parts of the country.
The actual (not seasonally adjusted) national average home price set another record in October 2020, coming in at $607,250. This was up 15.2% from the same month last year.
Excluding the GVA and the GTA – this country’s largest and most expensive housing markets – cuts more than $127,000 from the national average price.
In her research note, Rishi Sondhi of TD Economics, cautioned Canada’s real estate market can’t sustain the rocket fuelled growth seen in recent months for that much longer.
She noted sales were quite strong despite the monthly dip in October and markets with declines were narrowly based. “With pent-up demand likely satisfied over the summer, low rates and resilient employment in high wage industries (where homeownership rates tend to be high) continues to support the market,” she said.
“However, sales are likely still well above fundamentally supported levels,” she continued, adding, “In our view, they can only remain that way for so long. As such, we look for activity to continue to cool in coming months. And the possibility of more widespread lockdowns could add further downward pressure to sales moving forward.”
Sonhi also observed that tighter local markets and the consumer shift towards buying larger and more expense properties should keep price growth positive in the fourth quarter at the very least. “However, affordability pressures are mounting in key markets like Toronto, which should make sustaining these levels difficult,” she said.
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