Canadian home sales fell sharply in February

Sales in Canada fell by 9.1% month in month in February and are 4.4% below where they were in the same month in 2018, the latest agent figures show.

The data from the Canadian Real Estate Association (CREA) also shows that average house prices fell nationally by 5.2% to $468,350, while the number of newly listed homes were down by 3.2% on a monthly basis.

The index report points out that the national average price is heavily skewed by sales in Greater Vancouver and the Greater Toronto Area, two of Canada’s most active and expensive markets. Excluding these two markets the national average price was just under $371,000.

It means that sales activity was almost 12% below the 10 year February average. In British Columbia, Alberta as well as Newfoundland and Labrador, sales were more than 20% below their 10 year average for the month.

‘February home sales declined across a broad swath of large and smaller Canadian cities. The housing sector is on track to further reduce waning Canadian economic growth,’ said Gregory Klump, CREA’s chief economist.

‘Only time will tell whether successive changes to mortgage regulations went too far, since the impact of policy decisions becomes apparent only well after the fact. Hopefully policy makers are thinking about how to fine tune regulations to better keep housing affordability within reach while keeping lending risks in check,’ he added.

The index also found that there were 5.7 months of inventory on a national basis at the end of February 2019, a three and a half year high and a little above its long term average of 5.3 months.

That said, there are significant regional differences. The number of months of inventory has increased far above its long term average in Prairie Provinces and Newfoundland and Labrador. As a result, homebuyers there have an ample choice of listings available for purchase. By contrast, the measure remains well below its long term average in Ontario and the Maritimes.

Trends continue to vary widely among the 17 housing markets tracked by the index, a breakdown in the figures show. Results remain mixed in British Columbia, with prices down on a year on year basis in Greater Vancouver by 6.1% and the Fraser Valley by 2.8%. By contrast, prices increased by 3% in Victoria and were up 7.7% elsewhere on Vancouver Island.

Prices were up from year ago levels in Guelph by 6.8%, in the Niagara Region by 6.5%, in Hamilton-Burlington by 5% and the Greater Toronto Area by 2.3%. By contrast, home prices were up by just 0.2% in Oakville-Milton, while in Barrie and District prices b=fell by 4.3%.

Across the Prairies, supply is historically elevated relative to sales and home prices were down from year ago levels. Prices were down by 4.4% in Calgary, 4.5% in Edmonton, 5.1% in Regina and 3% in Saskatoon. The report says that the market it likely to remain weak in these cities until demand and supply come back into better balance.

Home prices rose 7.4% year on year in Ottawa, by 6.2% in Greater Montreal and by 1.6% in Greater Moncton.