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Canadian property sales still increase as prices hold steady, latest data shows

Annual activity totalled 456,749 sales in 2011, up 2.2% from 2010 and the number of newly listed homes increased 3% month on month.

A simultaneous increase in sales and new listings kept the national resale housing in balanced territory, CREA said.

Prices have not increased much, the national average home price was up just 0.9% on a year on year basis in December, marking the smallest increase since October 2010.

Activity rose in more than half of all local markets, including some of Canada’s most active, with monthly declines posted in most of the remaining markets.

Actual, not seasonally adjusted, national sales activity came in 4.6% above year ago levels in December. It also stood above the five and 10 year average for December sales.

‘The momentum in sales activity provides clear evidence that low interest rates continue to draw homebuyers to the housing market. While buyers have become increasingly cautious, the hand off for sales activity going into the New Year suggests that Canada’s housing market will continue to benefit from low interest rates in 2012, and continue making a significant contribution to Canadian economic activity,’ said Gary Morse, CREA President.

With sales and new listings having climbed in tandem, the national housing market remained in balanced territory in December. The national sales to new listings ratio, a measure of market balance, stood at 54.8% in December, down slightly from 55.5% in November.

Based on a sales to new listings ratio of between 40 to 60%, just over half of local markets in Canada were balanced in December. This result is little changed from November.

The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is a further measure of the balance between housing supply and demand. Nationally, it stood at 5.8 months at the end of December, down from 5.9 months at the end of November.
While it has held fairly steady near six months since April 2011 onward, it peaked in August, with December marking the fourth monthly decline and a return to where it stood at the end of the first quarter.

The actual, not seasonally adjusted, national average price for homes sold in December 2011 was $347,801, 0.9% above the average selling price in December 2010, marking smallest increase since October 2010.

‘Momentum for national sales activity and average price remains positive but is slowing, which suggests that the continuation of low interest rates is not causing the Canadian housing market to overheat,’ said Gregory Klump, CREA’s chief economist.

‘High end home sales seem unlikely to spike again in the first quarter like they did at the beginning of 2011, so national average price momentum may wane further over the next few months. With interest rates widely expected to remain low throughout 2012, home ownership will remain affordable, and continue to support home sales activity,’ he added.