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Steady sales activity keeps Canadian real estate market on track

Year to date sales pulled ahead of 2010 levels for the first time this year and remain in line with the ten year average and the national housing market remained firmly entrenched in balanced territory, CREA said.

The latest report also reveals that there were more balanced local markets in August than at any other time on record and the national average price posted another yea on year gain in August, but has moderated from elevated levels earlier this year.

However, upward skewing of the national average price is diminishing due to fewer expensive sales and a declining share of national activity in Vancouver and Toronto.

Among major urban centres, Toronto and Ottawa posted a monthly increase in activity while Calgary, Montreal and Vancouver saw activity decline slightly.

‘The housing market in Canada remained on a firm footing in August when compared to volatile financial markets. Through their actions, homebuyers are showing that they remain confident about the stability of the Canadian housing market, and recognize that the continuation of low interest rates represents an excellent opportunity to buy their first home or trade up,’ said Gary Morse, CREA president.

Actual, not seasonally adjusted, sales activity came in 15.8% above national levels reported a year ago. This was the largest year on year on year increase since last April, but largely reflects weakened activity a year ago.

A total of 324,030 homes have traded hands via Canadian MLS® Systems so far this year. While this stands only marginally above levels in the first eight months of last year, it nevertheless marks the first time this year that year to date activity has pulled ahead of 2010 levels.

The number of newly listed homes nationally was also little changed from July to August. This kept the national housing market firmly planted in balanced territory. The national sales to new listings ratio, a measure of market balance, stood at 51.6% in August, unchanged compared to July.

The number of months of inventory stood at 6.2 months at the end of August on a national basis, which is little changed from the end of July which was 6.1 months. The national months of inventory figure has been stable at about six months since April. 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 another measure of the balance between housing supply and demand.

The actual, not seasonally adjusted, national average price for homes sold in August 2011 stood at $349,916. This is 7.7% above its year ago level, which marked the low point for 2010.

The national average price has moderated compared to earlier this year, with sales activity in Vancouver, and more recently in Toronto, exerting less of an effect on the national average. Their share of provincial and national sales activity reached unusually elevated levels earlier this year, but has since receded in line with normal seasonal variations.

‘Once again, economic and financial market headwinds outside Canada are keeping interest rates lower for longer. Those headwinds will likely persist until, and indeed after, fiscal quagmires in the U.S. and Europe are resolved. In the meantime, the Bank of Canada will have ample reason to delay raising interest rates further, which is supportive for the Canadian housing market,’ said Gregory Klump, CREA’s chief economist.