According to statistics released by the Canadian Real Estate Association (CREA), national home sales posted a decline of 2.5 per cent from November to December 2018, marking the fourth-straight monthly decline in home sales. These results also capped the weakest annual sales since 2012.
Home sales declined in about 60 per cent of all local markets in December, led by lower activity in Greater Vancouver, Vancouver Island, Ottawa, London & St. Thomas and Halifax-Dartmouth, along with a mix of other large and medium-sized urban centres across the country.
Actual (not seasonally adjusted) activity fell 19 per cent year-over-year in December 2018 and was nearly 12 per cent below the 10-year average for the month of December. Sales were down on an annual basis in three-quarters of all local markets, led overwhelmingly by the Lower Mainland of British Columbia, the Okanagan Region, Calgary, Edmonton, the Greater Toronto Area and Hamilton-Burlington.
This decline is due in part to elevated activity in December 2017 as homebuyers rushed to make a purchase prior to the new federal mortgage stress test, which came into effect on January 1, 2018.
“The Bank of Canada recently said that it expects housing activity will stay ‘soft’ as households ‘adjust to the mortgage stress-test and increases in mortgage rates,’ even as jobs and incomes continue growing,” said Gregory Klump, CREA’s chief economist, in a press release. “Indeed, the Bank’s economic forecast shows it expects housing will undermine economic growth this year as the mortgage stress test has pushed home ownership affordability out of reach for some home buyers.”
The number of newly listed homes rose by a slight 0.2 per cent from November to December 2018, with declines posted in nearly half of all local markets, offset by gains in the other half.
With sales down and new listings relatively unchanged in December, the national sales-to-new listings ratio eased to 53.3 per cent, compared to 54.8 per cent in November 2018. The national sales-to-new listings ratio has remained close to its long-term average of 53.5 per cent since the beginning of 2018. About two-thirds of all local markets were in balanced territory in December.
There were 5.6 months of inventory nationally at the end of December 2018. While close to its long-term average of 5.3 months, the number of months of inventory has increased far beyond its long-term average in Prairie provinces and in Newfoundland & Labrador. Meanwhile, the measure remains well below its long-term average in Ontario and Prince Edward Island, as other provinces are seeing more balanced sales and inventory.
The Aggregate Composite MLS Home Price Index (HPI) was up by 1.6 per cent on an annual basis in December 2018. Although the increase is smaller, it is still in line with the annual price gains posted since July.
Apartment units posted annual price increases of 4.9 per cent in December, followed by townhouse/row units, which saw prices climb 3.1 per cent year-over-year. Meanwhile, two-storey single-family homes saw prices climb 0.4 per cent, but one-storey single-family homes saw prices decline by 0.3 per cent annually.
Trends varied across the housing markets tracked by the MLS HPI. Although prices fell 2.7 per cent year-over-year in Vancouver, they remained 2.5 per cent above year-ago levels in the Fraser Valley. However, Victoria saw home prices increase 6.4 per cent annually, while they climbed 11 per cent elsewhere on Vancouver Island.
In the Greater Golden Horseshoe, home prices jumped 6.8 per cent in Guelph and the Niagara Region, 6.4 per cent in Hamilton-Burlington, 3.3 per cent in Oakville-Milton, and three per cent in the GTA. Meanwhile, home prices in Barrie and District fell 1.1 per cent year-over-year.
In the Prairie provinces, home prices fell 3.2 per cent on an annual basis in Calgary and two per cent in Edmonton. Regina saw prices fall 5.2 per cent year-over-year, while Saskatoon saw declines of 1.2 per cent. Home prices in the Prairies is likely to remain weak until elevated supply is reduced and becomes more balanced, according to the CREA.
In Ottawa, home prices climbed 6.9 per cent annually, while in Montreal, they rose six per cent. Meanwhile, Greater Moncton saw home prices climb 2.5 per cent year-over-year. All three of these regions saw increases due to climbing townhouse/row unit prices.
The actual (not seasonally adjusted) average price for homes sold in December 2018 just topped $472,000 nationally, a decline of 4.9 per cent year-over-year. When removing sales figures from Greater Vancouver and Greater Toronto, two of the country’s most active and expensive housing markets, drops the national average price to just below $375,000.