November resale market cools
OTTAWA – Home sales via its Multiple Listing Service (MLS) declined for the third consecutive month in November, falling 2.3% on a month-over-month basis and 12.6% on a year-over-year basis, according to the Canadian Real Estate Association (CREA). The number of new listings declined by 3.3% from October to November.
The realtors’ group noted while the number of homes trading hands is up from its low point this past spring, it remains below the monthly levels posted from 214 to 2017.
Transactions declined in just over half of all local markets including the Greater Toronto Area (GTA), the Greater Vancouver Area (GVA) and Hamilton-Burlington.
Actual sales were down 12.6% year-over-year and were below the 10-year average for the month of November. Sales were down from year-ago levels in three-quarters of all local markets, including the Lower Mainland of British Columbia, Calgary, the GTA and Hamilton-Burlington.
“The decline in homeownership affordability caused by this year’s new mortgage stress-test remains very much in evidence,” CREA chief economist Gregory Klump said in a statement. “Despite supportive economic and demographic fundamentals, national home sales have begun trending lower. While national home sales were anticipated to recover in the wake of a large drop in activity earlier this year due to the introduction of the stress-test, the rebound appears to have run its course.”
The number of newly listed homes fell by 3.3% between October and November, falling in roughly 70% of all local markets. The national sales-to-new listings ratio tightened to 54.8%, compared to its long-term average of 53.4%. About 60% of all local markets were in balanced market territory in November 2018.
The actual national average price for homes sold in November 2018 was just over $488,000 – down 2.9% from the same month last year. Excluding the GTA and the GVA, this country’s most active and expensive markets, drops the national average to just over $378,000.
“Home sales have clearly lost some momentum, with November’s decline marking the third straight setback,” Rishi Sondhi of TD Economics observed in his research note. “Rising interest rates are restraining sales, particularly in affordability challenged markets like Toronto, Vancouver, Victoria and Hamilton.”
He also pointed out CREA’s reported is all bad news as the market remains balanced and price growth is contained; although this segment of the housing market is likely to be a drag on the GDP for the fourth quarter of the year but offset by healthy housing starts.
“Looking ahead to next year, firm population growth coupled with on-going job gains should push sales higher relative to 2018,” Sondhi said, adding, “Still, only a modest gain is expected, as rising interest rates take their toll.”