Property sales in Canada start to recover from year ago falls
Residential property sales in Canada are beginning to recover after declining due to changes in mortgage rules, according to the latest data from the Canadian Real Estate Association (CREA).
The number of home sales was little changed on a month on month basis in July 2013 but sales have edged up two tenths of a percentage point to hold below levels reached prior to tightened mortgage regulations last year.
The number of local markets where sales improved on a month on month basis ran roughly even with those where activity edged back in July. Outsized gains in Greater Toronto and Greater Vancouver tipped the balance, resulting in a small increase at the national level.
‘Resale housing activity was mixed in July, with some local markets continuing to improve and others dialing back some of their recent gains. Among major markets where sales declined in July, activity is still higher than it was at the start the year,’ said CREA president Laura Leyser.
According to CREA chief economist Gregory Klump home sales have staged a bit of a recovery in recent months after having declined in the wake of tightened mortgage rules and lending guidelines last year. But he added that the numbers for July suggest that national activity is levelling off at what might best be described as average levels.
‘Sales dropped sharply in August last year, so we may see some year on year increases in sales and average prices next month that would reflect weakness in the rear view mirror,’ he explained.
Actual, not seasonally adjusted, activity came in 9.4% ahead of levels reported in July 2012. Sales were up on a year on year basis in three of every five local markets, led by double digit gains in Greater Vancouver, Calgary, Edmonton, and Greater Toronto. In Greater Toronto and Greater Vancouver, increases reflect sales trends that were already weakening at this time last year.
The actual, not seasonally adjusted, national average price for homes sold in July 2013 was $382,373, an increase of 8.4% from the same month last year. ‘Sales activity in some of Canada’s larger and more expensive markets was softening and pulling down the national average home price at this time last year,’ said Klump.
‘The recent improvement of activity in these markets contributed to the national average price gain in July. If Greater Toronto and Greater Vancouver are removed from national average price calculations, the increase is cut almost by half,’ he pointed out.
He said that a better gauge of what’s going on with prices is the MLS® Home Price Index, which is not affected by changes in the mix of sales the way that the average price is. The index shows year on year price growth stabilising between 2% and 3%.
Year on year price growth picked up for two storey single family homes with growth of 3.3% and apartment units saw 1.3% growth, but prices but slowed for one storey single family homes to 2.7% and for and town houses and terraced houses to 1%.Some 284,865 homes have traded hands across the country so far this year. That stands 4.6 per cent below levels in the first seven months of 2012.
The number of newly listed homes edged down 0.4% on a month on month basis in July. As with sales activity, the number of local markets where new supply increased was equal to those where it declined. However, due to its size, the decline in new listings in Greater Toronto tipped the balance slightly negative at the national level.
With both sales activity and new listings little changed in July, the national sales to new listings ratio was 54%. This remains roughly on par with June’s reading of 53.7% . While the national housing market has tightened slightly in recent months, it remains firmly rooted in balanced market territory where it has been since early 2010.
The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity. At 6.1 months, the measure was unchanged from June to July. The number of months of inventory was higher in July than in June in more than half of all local markets, and stood above the 10 year average for the month of July in about 70% of all local markets.