National home sales increased 2.2 per cent from November to December 2016, according to statistics released by the Canadian Real Estate Association (CREA). This rebound is less than half of the drop in activity from October to November, when monthly sales figures were the lowest in over four years after tightened mortgage regulations came into effect.
Sales activity was up on a month-over-month basis in about 60 per cent of all local markets, led by Calgary and Edmonton, where sales picked up after steep declines in November.
Actual (not seasonally adjusted) sales activity fell five per cent in December compared to one year ago, when it surpassed the record for the month. The number of homes sold in 2016 was up by 6.3 per cent year-over-year, reflecting strong sales activity in the first half of the year.
“Sales set a new annual record last year,” said Cliff Iverson, CREA president, in a press release. “However, tightened mortgage regulations are expected to contribute to lower sales activity this year, though the extent to which they will weigh on housing markets across Canada will vary.”
“Home sales are unlikely to benefit the Canadian economy as much in 2017 as they did in 2016,” added Gregory Klump, CREA chief economist. “New regulations mean that in order to qualify for a mortgage, home buyers will either have to save longer for a bigger down payment or purchase a lower priced home. In urban centres where the latter are in short supply, that’s likely to translate into fewer sales.”
The number of newly listed homes fell three per cent in December 2016 compared to the month before. New listings were down in about 60 per cent of all local markets, which the largest declines seen in B.C.’s Lower Mainland, Calgary and the Greater Toronto Area (GTA).
As sales were up and new listings were down, the national sales-to-new listings ratio climbed to 63.5 per cent in December, indicating a sellers’ market. Most of the local housing markets that favoured sellers in December were located in British Columbia, in and around the GTA and across Southwestern Ontario.
The MLS Home Price Index (HPI) jumped 14.2 per cent year-over-year in December 2016, which is slightly lower than November (14.4 per cent year-over-year) and October (14.6 per cent year-over-year). This is due to softening price trends for single family homes in the Lower Mainland of B.C.
Year-over-year price gains remained strongest for two-storey single family homes and townhomes (16.1 per cent and 15.4 per cent, respectively). One-storey single family homes had price gains of 13.3 per cent year-over-year, while apartment units showed the slowest price gains at 12 per cent compared to the year before.
The actual (not seasonally adjusted) national average price for homes sold in December 2016 climbed 3.5 per cent year-over-year to $470,661, which is the smallest annual increase in nearly two years.
The national average price continues to be inflated by sales activity in Greater Vancouver and the GTA, which are two of Canada’s tightest, most active and expensive housing markets. However, Greater Vancouver’s sales activity slowed considerably during 2016. When excluding the GTA and Greater Vancouver areas, the national average price drops nearly $120,000 to $352,513.