Canadian Home Sales Edge Higher in August

For the sixth consecutive month, home sales recorded via Canadian MLS systems advanced in August, according to statistics released by the Canadian Real Estate Association (CREA).

Transactions are now running almost 17 per cent above the six-year low reached in February 2019, but remain about 10 per cent below highs reached in 2016 and 2017.

Although monthly changes were generally modest across most of the country, activity was up in more than half of all local markets with gains led by Winnipeg and the Fraser Valley. Moncton posted the biggest monthly decline in sales having recently jumped to record heights.

Actual (not seasonally adjusted) sales activity was up 5 per cent from where it stood in August 2018. The number of homes that traded hands was up from year-ago levels in the Lower Mainland of British Columbia, Calgary, Winnipeg, the Greater Toronto (GTA), Ottawa and Montréal.

“The recent marginal decline in the benchmark five-year interest rate used to assess homebuyers’ mortgage eligibility, together with lower home prices in some markets, means that some previously sidelined homebuyers have returned,” said Gregory Klump, CREA’s Chief Economist. “Even so, the mortgage stress-test will continue to limit homebuyers’ access to mortgage financing, with the degree to which it further weighs on home sales activity continuing to vary by region.”

The number of newly listed homes rose 1.1 per cent in August. With sales and new supply up by similar magnitudes, the national sales-to-new listings ratio was 60.1 per cent—little changed from July’s reading of 60.0 per cent.

The measure has risen above its long-term average (of 53.6 per cent) in recent months, which indicates a tighter balance between supply and demand and a growing potential for price gains.

Based on a comparison of the sales-to-new listings ratio with the long-term average, about three-quarters of all local markets were in balanced market territory in August 2019. Of the remainder, the ratio was above the long-term average in all markets save for some in the Prairie region.

There were 4.6 months of inventory on a national basis at the end of August 2019 – the lowest level since December 2017. This measure of market balance has been retreating below its long-term average of 5.3 months.

The number of months of inventory has swollen far beyond long-term averages in Prairie Provinces and Newfoundland & Labrador, while the measure is running well below long-term averages in Ontario, Québec and Maritime provinces.

The Aggregate Composite MLS Home Price Index (MLS HPI) rose 0.8 per cent m-o-m in August 2019, the largest increase in over two years.

Seasonally adjusted MLS HPI readings in August were up from the previous month in 14 of the 18 markets tracked by the index, marking the biggest dispersion of monthly price gains since last March.

In recent months, home prices have generally been stabilizing in British Columbia and the Prairies meanwhile price growth has begun to rebound among markets in the Greater Golden Horseshoe (GGH) region.

A comparison of home prices to year-ago levels yields considerable variations across the country, with declines in western Canada and price gains in eastern Canada.

The actual (not seasonally adjusted) Aggregate Composite MLS (HPI) was up 0.9 per cent y-o-y in August 2019. This marks the second consecutive month in which prices climbed above year-ago levels and the largest y-o-y increase since the end of last year.

Home prices in Greater Vancouver (GVA) and the Fraser Valley remain furthest below year-ago levels, (-8.3 per cent and -5.5 per cent) while Vancouver Island and the Okanagan Valley logged y-o-y increases (3.7 per cent and 1.5 per cent).

Prairie markets posted modest price declines, while y-o-y price growth has re-accelerated ahead of overall consumer price inflation across most of the GGH.

Two-storey single-family home prices saw a 1.2 per cent y-o-y increase. One-storey single family home prices rose 0.7 per cent y-o-y, townhouse/row and apartment unit edged up 0.3 per cent and 0.5 per cent.

The actual (not seasonally adjusted) national average price for homes sold in August 2019 was around $493,500, up almost 4 per cent from the same month last year.

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