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Canadian real estate market little changed in October, latest data shows

Sales activity is now at its highest level since January and the national average price is 5.5% up year on year to stand at $362,899.
The number of homes sold through MLS® Systems of real estate Boards and Associations in Canada rose 1.2% in October from the previous month. While national sales activity levels are still best described as average, the monthly rise in October sales built on the 2.5% gain in September, and lifted activity to the highest level since January.

Just over half of all local markets posted monthly sales increases, led by gains in Montreal, Toronto, and Vancouver.

‘There was no shortage of headline news in October about global financial market volatility and economic uncertainty, but it doesn’t appear to have dampened home buyers’ spirits. Interest rates are at low levels and are likely to stay that way for some time to come. Home buyers clearly see the opportunities that the current interest rate environment presents,’ said Gary Morse, CREA’s president.
As has been the case in most months this year, actual (not seasonally adjusted) national home sales in October stayed in line with the 10 year average for the month. Although up 8.5% from levels one year ago, the gain in large part reflects last year’s nascent pick up in activity following a mid year lull.

A total of 397,561 homes have sold so far this year, an increase of 1.8% from levels in the first 10 months of 2010, but is directly in line with the 10 year average for the year to date figure. The number of newly listed homes remained little changed in October compared with levels recorded in each of the previous three months.

‘The prevailing economic outlook for Canada is one of slower but still positive economic growth, with heightened caution about investment and hiring decisions,’ said Gregory Klump, CREA’s chief economist.
‘Consumer confidence and the housing sector are being supported by low interest rates and high employment levels, but their prospects depend on how Canada’s economic outlook evolves in response to global economic risks and outcomes in the months ahead,’ he explained.

‘Home sales activity over the past couple of months suggests buyers are confident that the Canadian economy will remain relatively unscathed by global economic risks, since every home purchase is a homebuyer’s vote of confidence in the future. That confidence is no doubt rooted in the success of coordinated fiscal and monetary policy responses that helped quickly pull Canada out of the last recession, and a stated willingness and ability to carry out further policy actions if need be,’ he added.

While the combination of stable new listings and stronger sales made for a slightly tighter balance between supply and demand in October, the national housing market remains firmly rooted in balanced territory. The national sales to new listings ratio, a measure of market balance, stood at 53.4% October, up from 52.8% in September.

Based on a sales to new listings ratio from 40 to 60%, about 60% of local markets in Canada were in balanced market territory in October. Of the remaining markets, there was a handful more seller’s markets than buyers’ markets.

The number of months of inventory stood at six months at the end of October on a national basis, little changed from the end of September at 6.1 months. It has remained 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.