National home sales activity continued to trend down in July, according to the Canadian Real Estate Association, especially in British Columbia and Ontario.
CREA said the slowdown in demand in these two provinces was expected, as many home purchases occurred in the first half of the year in anticipation of the introduction of the Harmonized Sales Tax (HST). Due to their significance to the Canadian housing market, the decline in B.C. and Ontario greatly influenced statistics recently released for the national housing market.
MLS® sales in B.C. declined by 14.1 per cent and by eight per cent in Ontario, which accounted for 85 per cent of the change in national activity in July.
“The soft sales figures we’re seeing right now can be attributed in part to
accelerated home purchases earlier in the year,” said CREA president Georges Pahud.
“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with
demand coming back into line with economic fundamentals.”
In Winnipeg, MLS® sales also declined last month, but the market has been on a steady rise, and sales by the end of July were up by two per cent.
Actual national sales activity was 30 per cent lower in July 2010 compared to last year’s record July. Year-to-date transactions are still up 5.6 per cent compared to the first seven months of last year, although this gap is expected to continue to shrink as the year progresses, since activity rose sharply over the second half of last year, reaching levels that are unlikely to be matched in the final five months of 2010.
New supply continues to adjust to lower demand. The seasonally-adjusted number of new residential listings on MLS® declined by 7.2 per cent in July 2010 compared to the previous month. This is the third consecutive month-over-month decrease, and the steepest in more than a decade. Since reaching their most recent peak in April, new listings have fallen 17.5 per cent.
The trend of declining new listings will help maintain the balance between supply and demand and temper home price volatility, according to CREA.
The national sales-to-new listings
ratio, a measure of market balance, has held steady between 48 and 49 per cent for the past three months, which is characteristic of a balanced market.
The average price of homes sold via MLS® in July was $330,351, edging up one per cent from the same month last year. While year-over-year comparisons have been shrinking as prices stabilize, the national average home price is likely somewhat understated this month, since the majority of activity declines occurred in B.C. and Ontario, which include many of Canada’s most expensive markets.
The same phenomenon is widely known to have caused much of the downward skewing in the national average price during the recession. This is most evident when looking at a breakdown of average prices by province.
Average home prices eased slightly in Nova Scotia and Prince Edward Island in July, but gains in every other province exceeded the national increase.
“While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region,” said Pahud. “Buyers and sellers should consult with a REALTOR® to find out about conditions in their local market.”