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Strong home sales earlier in the year “borrowed from sales this summer”
Sep 17, 2010
National resale housing activity improved in August, according to statistics released by the Canadian Real Estate Association (CREA).
Seasonally-adjusted national home sales activity via MLS® in August rose 4.1 per cent from the previous month, which is the first monthly increase since March this year.
Activity was up most in Ontario and British Columbia, with monthly gains in these two provinces accounting for most of the improvement in national sales activity in August. Seasonally-adjusted sales activity either increased or remained stable in over half of all local markets across Canada.
In Winnipeg, MLS® sales activity in August dropped by 33 per cent when compared to the same month last year, but year-to-date sales are slightly higher than 2009’s total for the same period.
“Our first week of MLS® sales in September is running neck and neck with 2009,” said WinnipegREALTORS® president Claude Davis, “and there is a better supply and choice of listings going into the fall than has been the case in a number of years.”
Nationally, year-to-date transactions are up 2.2 per cent compared to the first eight months of last year. Activity rose sharply over the second half of 2009 and reached levels that are unlikely to be matched in the final four months of 2010, so year-to-date comparisons are forecast to turn down in the coming months.
“High sales activity late last year and earlier this year borrowed from sales this summer and will continue to do so over the coming months,” said Gregory Klump, CREA’s chief economist. “This makes the return to more normal levels of sales activity look like a steep downward trend.
“The hangover from accelerated home purchases is likely to persist over the rest of the year. Although economic and job growth are expected to be tepid, they will continue to support housing markets,” he added.
The number of new residential listings on Canadian MLS® systems also edged up 1.9 per cent on a seasonally-adjusted basis in August compared to the previous month. Despite having edged slightly higher in all provinces except Alberta, new listings remain 16 per cent below the peak reached last April on a national basis.
The average price of homes sold via Canadian MLS® systems in August was $324,928, which is on par with the same month last year ($324,843). Average home prices eased slightly in Alberta and New Brunswick in August, but gains in every other province exceeded the national increase. Average price rose or was stable in nearly two-thirds of all local markets on a year-over-year basis, but increases are shrinking in Canada's most active and priciest markets.
“While the year-to-date average sale price in the local market of $242,000 is 11 per cent higher over the same period last year,” said Davis, “the August average monthly home sale price of $234,000 has dropped off from the earlier peak months of $250,000.”
“Rising interest rates and a projected slowdown in job growth mean that the Canadian housing market is expected to continue to cool,” said CREA president Georges Pahud. “This is overlooked in recent commentary that suggests further changes to mortgage regulations may be needed. A further tightening of regulations could negatively impact Canada’s softening housing market and consumer confidence.”