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Sales and prices in Canada continue upward but with considerable local variations

Actual, not seasonally adjusted, activity stood 2.1% above August 2013 levels and the number of newly listed homes fell 1.2% from July to August.

The 1.8% month on month sales rise marked the seventh consecutive monthly increase, and the highest level for sales since January 2010.

Although activity rose in fewer than half of all local housing markets in August, the national tally was fuelled by monthly sales increases in Greater Vancouver, Calgary and Greater

‘Sales picked up in some of Canada’s most active and expensive real estate markets which fuelled another national increase. Even so, the national increase in sales does not reflect local trends in many markets across Canada,’ said CREA president Beth Crosbie.

CREA chief economist pointed out that sales activity in recent months has remained stronger than was anticipated earlier this year. ‘Listings and sales this spring were deferred due to unseasonably harsh weather, which subsequently supported activity once the delayed spring home buying season got into gear. This trend was reinforced by a decline in mortgage interest rates,’ he said.

The boost from deferred sales is still expected to prove transitory. While national activity has yet to cool, sales were down from the previous month in the majority of Canada’s local markets, which may be early evidence that the transitory boost is fading. That said, low interest rates will continue to support housing affordability and sales activity,’ he added.

The index also shows that year to date sales activity is up 4.3% compared to the first eight months of 2013 and remains in line with the 10 year average for the period.

The actual, not seasonally adjusted, national average price for homes sold in August 2014 was $398,618, up 5.3% from the same month last year. But CREA points out that the national average price continues to be skewed upward by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s largest and most expensive housing markets.

Excluding these two markets from the calculation, the average price is a relatively more modest $324,738 and the year on year increase shrinks to 3.9%.

Year on year price growth in August picked up slightly for townhouse and terraced homes and apartments but slowed for one storey single family homes and was unchanged for two storey single family homes.

Two storey single family homes continue to post the biggest year on year price gains with growth of 6.32%, followed closely by town house and terraces up 5.59% and one storey single family homes up 5.23%. Price growth for apartments remains comparatively more modest at 3.38%.

Year on year price growth varied among local housing markets tracked by the index. As in recent months, the biggest gains were in Calgary with price rises of 9.83% followed by Greater Toronto at 7.82% and Greater Vancouver at 5.01%.

The number of newly listed homes fell 1.2% in August compared to July. Led by Greater Toronto, new supply was down in about 60% of local markets. The national sales to new listings ratio was 55.5% in August, up from 53.9% in July. While this means the housing market became marginally tighter, it remains well entrenched within the range between 40 and 60% that marks balanced territory.

Just over half of all local markets posted a sales to new listings ratio in this range in August. Of the remainder, more than half were sitting above the 60% threshold that marks the border between balanced and seller’s market territory, almost all of which are located in British Columbia, Alberta and Southern Ontario.

The number of months of inventory is another important measure of the 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.

There were 5.8 months of inventory nationally at the end of August 2014, down from six months in May, June and July.  As with the sales to new listings ratio, the number of months of inventory remains well within balanced market territory but does point to a market that has become tighter in recent months.