Home sales down by 0.9% in Canada in June but prices up over 11% year on year

Nationally home sales fell 0.9% from May to June in Canada while prices were up 11.2% year on year, according to the latest index data.

It means that monthly falls in sales activity has left transactions down 2.6% below the record set in April 2016, the home index from the Canadian Real Estate Association of Canada (CREA) also shows.

There is also considerable price differences depending on location. For example if Greater Toronto and Greater Vancouver are left out of the equation prices are up 8.4% year on year.

Sales activity was down from the previous month in about half of all markets in June, with declines in Greater Vancouver, the Fraser Valley and Greater Toronto having eclipsed gains in comparatively less active housing markets.

‘While national sales activity remains strong, there are still significant differences in housing market trends across Canada,’ said CREA President Cliff Iverson.

‘While home sales activity and price growth are running strong in B.C. and Ontario, they remain subdued in other markets where home buyers are cautious and uncertain about the outlook for their local economy,’ he added.

A breakdown of the figures show that two storey single family home prices continued to post the biggest year on year gain at 15.5%, followed by one storey single family homes up 14%, townhouse/row units up 13.6% and apartments up 9.8%.

While prices in nine of the 11 markets tracked by the index posted year on year gains in June, price growth continues to vary widely among housing markets. Greater Vancouver with price growth of 32.1% and the Fraser Valley up 35.5% posted the largest annual gains.

Greater Toronto recorded price growth of 16%, Victoria was up 15.7%, up 10.6% in Vancouver Island, up 7.9% in Greater Moncton, up 4.1% in Calgary, up 3.6% in Regina, up 1.9% in Greater Montreal and up 1% in Ottawa but prices fell by 4.1% in Calgary year on year and by 1.4% Saskatoon.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets. The actual, not seasonally adjusted, national average price for homes sold in June 2016 was $503,301, up 11.2% year on year.

However, if these two housing markets are excluded from calculations, the average price is a more modest $374,760 and the gain is trimmed to 8.4% year on year.

June sales extended trends observed the previous month, according to Gregory Klump, CREA’s chief economist. ‘As was the case in May, the monthly decline in national sales activity was led by the Lower Mainland of British Columbia and markets in or around the GTA,’ he said.

‘In keeping with the law of supply and demand, exceptionally low inventory combined with high demand continues to translate into strong price growth in these housing markets, where year on year price gains have been running in double digit territory since late last year,’ he pointed out.

Actual, not seasonally adjusted, sales activity was up 5.2% year on year in June but annual increases have been steadily losing momentum since February 2016 while the number of newly listed homes increased by 2.2% in June 2016 compared to May.

The data shows that new supply climbed among a broad majority of all local markets, led by Greater Toronto, Oakville-Milton, Montreal, Quebec City, and B.C.’s Fraser Valley. The return of activity in Fort McMurray following its evacuation in May also contributed to the national increase in new listings.

With sales down and new listings up, the national sales to new listings ratio eased to 63.3% in June 2016, compared to 65.3% in May. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was above 60% in about half of all local housing markets in June, virtually all of which are located in British Columbia, in and around Toronto and across Southwestern 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 4.6 months of inventory on a national basis at the end of June 2016, which is unchanged from May’s reading and the lowest level in more than six years. The number of months of inventory has been trending lower since early 2015, reflecting increasingly tighter housing markets in B.C. and Ontario. It currently sits near or below two months in a number of local markets in British Columbia, the GTA and environs and Southwestern Ontario.

The Aggregate Composite MLS Benchmark price rose by 13.6% year on year to $564,700, the biggest gain since December 2006 and for a fifth month in a row year on year price growth accelerated for all benchmark property types tracked by the index.

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