National home sales fell 0.4 per cent between August and September 2018, marking the first decline since April, according to recent statistics from the Canadian Real Estate Association (CREA). While sales activity has been stronger compared to the first half of the year, it still remains well below most other months since 2014.
Home sales activity dropped on a monthly basis in slightly more than half of all local markets, led by Vancouver Island and Edmonton, along with several markets in the Greater Golden Horseshoe (GGH). Falling activity in these markets was offset by gains experienced in the Fraser Valley and Montreal.
Actual (not seasonally adjusted) activity declined by 8.9 per cent compared to one year ago. About 70 per cent of local markets experienced an annual decline, led primarily by declines in major urban centres in British Columbia, as well as Calgary, Edmonton and Winnipeg.
“The balance between the number of home buyers and suitable homes varies depending on location, housing type and price range,” said Barb Sukkau, CREA president, in a press release. “Differences in market balance will likely come into sharper focus as interest rates rise and cause this year’s new mortgage stress test to become even more restrictive.”
The number of newly listed homes climbed three per cent between August and September, led by the Lower Mainland of British Columbia and the Greater Toronto Area (GTA). Over half of all local markets posted a monthly increase in new listings, which was offset by declines that topped three per cent in more than half of the remaining local markets.
“Sales activity may get all the press but it’s the balance between that and the number of homes for sale that set the tone for pricing environment,” added Gregory Klump, CREA’s chief economist. “In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price. However, in places where buyers are keep to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price. It will be interesting to see how supply and demand respond to rising interest rates amid this year’s new mortgage stress test.”
With sales declining slightly and new listings rising, the national sales-to-new listings ratio eased to 54.4 per cent in September, compared to 56.2 per cent in July and August. The long-term average for the sales-to-new listings ratio is 53.4 per cent. Based on a comparison of the sales-to-new listings ratio with the long-term average, approximately three quarters of all local markets were in balanced market territory last month.
In addition, there were 5.3 months of inventory nationally at the end of August 2018, which is in line with the measure’s long-term average. However, this figure is well above the long-term average in all Prairie provinces and in Newfoundland & Labrador.
The Aggregate Composite MLS Home Price Index (HPI) was up by 2.3 per cent year-over-year in September 2018. This increase was in line with increases posted in each of the two previous months.
Apartment units experienced the largest annual price gains in September, with prices climbing 8.4 per cent, followed by townhouse/row units, which saw price gains of 4.5 per cent year-over-year. Meanwhile, prices of one-storey and two-storey single-family homes were relatively unchanged, both declining by 0.3 per cent annually.
Trends continue to vary significantly among the 17 housing markets tracked by the MLS HPI. In British Columbia, home price increases are falling on an annual basis in Greater Vancouver (+2.2 per cent) and the Fraser Valley (+8.5 per cent). Meanwhile, home prices in Victoria climbed 8.7 per cent year-over-year in September 2018, while other regions of Vancouver Island saw price increases of 13.2 per cent annually.
The Prairie provinces saw benchmark home prices remain down year-over-year in Calgary (-2.6 per cent), Edmonton (-2.6 per cent), Regina (-4.7 per cent) and Saskatoon (-1.9 per cent).
In the Greater Golden Horseshoe region, home prices were up year-over-year in Guelph (+8.0 per cent), Hamilton-Burlington (+6.1 per cent), the Niagara Region (+5.9 per cent), the GTA (+2.0 per cent) and Oakville-Milton (+1.4 per cent). Meanwhile, home prices fell in Barrie and District (-3.6 per cent).
Ottawa saw home prices increase 6.9 per cent year-over-year (led by a 7.9 per cent increase in two-storey single-family home prices), while Greater Montreal saw price increases of 6.1 per cent annually (led by a 7.0 per cent increase in townhouse/row unit prices) and by 3.4 per cent in Greater Moncton (led by a 10.3 per cent increase in apartment unit prices).
The actual (not seasonally adjusted) national average price for homes sold in September 2018 was just below $487,000, relatively unchanged (+0.2 per cent) from September 2017. The national average price is heavily skewed by sales in the Greater Toronto and Greater Vancouver Areas. When these regions are removed from calculations, the national average price for a home falls by nearly $104,000 to just over $383,000.