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Low interest rates and affordability boosting housing sales
Sep 18, 2009

National resale housing market sales activity posted the largest year-over-year gain in more than two years, according to the Canadian Real Estate Association.

CREA reported a total of 42,483 homes traded hands via MLS®, an increase of 18.5 per cent from the same month last year, and the third consecutive year-over-year gain of more than 15 per cent. 

On the other hand, sales were 6.6 per cent below the record for the month of August set in 2007.

“National sales activity in the third quarter is on track for a significant increase compared to the second quarter,” said CREA president Dale Ripplinger. “Low interest rates and affordability continue to attract home buyers to the housing market. Consumer confidence continues to rise, which bodes well for activity in the coming months,” he added.

WinnipegREALTORS® president Deborah Goodfellow said Manitoba consumers are expressing confidence in the housing market since the province has been faring better economically than most provinces.

Aggregate MLS® home sales activity for Canada’s 25 major markets posted the third consecutive increase from year-ago levels at more than 20 per cent in August.

Demand continues to improve in Canada’s more expensive housing markets, drawing the national average price upward. The national MLS® residential average price rose 11.3 per cent from year-ago levels to $324,779. This is the highest national average price for the month of August.

The MLS® residential average price for the month of August set records in every province except Alberta. A sustained increase in sales activity, including a rebound in activity at the higher end of the price spectrum in some of Canada’s priciest markets, is skewing the national average price upward.

The number of new listings coming onto the MLS® market posted the eighth consecutive decline from year-ago levels. New residential listings were down 8.9 per cent year-over-year to 64,167 units, the lowest level for the month of August in five years.

Improved demand is combining with fewer new listings to draw down housing market inventories. There were 212,227 homes listed for sale on MLS® in Canada at the end of August 2009, down 13.3 per cent from a year earlier. This is the fourth consecutive year-over-year decline in active listings, and the largest decline in more than six years.

Nationally, the number of months of inventory was up slightly to five months in August from 4.4 months in July, but still well below the recessionary peak of 12.8 months in January 2009. The number of months of inventory edged up in most major markets in August. 

The seasonally-adjusted dollar volume of all residential MLS® sales set a new record in August 2009, rising 1.5 per cent from the previous month to $14 billion. British Columbia contributed most to the increase, having posted the highest seasonally-adjusted dollar volume on record for the province.

“Big-ticket purchases pushed into positive territory in August for the first time since early last year,” said CREA chief economist Gregory Klump. “Recent cuts to mortgage interest rates will no doubt provide further support for this indicator, which is an important factor underlying the housing market.”

In Winnipeg, a record nine million-dollar-plus residential homes and condos have sold to date. There are currently 18 such MLS® listings — 16 homes and two condos — on the market.

“Activity may be leveling out as we indicated in last month’s revised resale housing market forecast,” Krump added.  

“Average prices dropped sharply over the second half of 2008 and have rebounded since then, so comparisons against year-ago levels are likely to show continued improvement over the rest of 2009.”