According to statistics recently released by the Canadian Real Estate Association (CREA), national home sales climbed 1.3 per cent from February to March 2018. Despite this slight improvement, national sales activity in Q1-2018 fell to its lowest quarterly level since Q1-2014.
March sales were up on a month-over-month basis in over half of all local housing markets, led by Ottawa and Montreal. Monthly sales gains were offset by declines in B.C.’s Lower Mainland, the Okanagan Region, Chilliwack, Calgary and Edmonton.
Actual (not seasonally adjusted) activity fell 22.7 per cent from the record sales activity in March 2017, marking a four-year low for the month and falling seven per cent below the 10-year average for the month of March. Activity fell on a year-over-year basis in more than 80 per cent of all local markets, including every major urban centre except Montreal and Ottawa. The large majority of year-over-year declines were well into double digits.
“Government policy changes have made home buyers and sellers increasingly uncertain about the outlook for home prices,” said Andrew Peck, CREA president, in a press release. “The extent to which these changes have impacted housing market sentiment varies by region.”
“Recent changes to mortgage regulations are fueling demand for lower priced homes while shrinking the pool of qualified buyers for higher-priced homes,” said Gregory Klump, CREA’s chief economist. “Given their limited supply, the shift of demand into lower price segments is causing those sale prices to climb. As a result, ‘affordably priced’ homes are becoming less affordable while mortgage financing for higher priced homes remains out of reach of many aspiring move-up homebuyers.”
The number of newly listed homes climbed 3.3 per cent in March 2018. However, new listings have not recovered from the 21.1 per cent drop recorded between December 2017 and January 2018, which remains the largest month-over-month decline on record by a large margin. With sales up by less than new listings in March, the national sales-to-new listings ratio eased to 53 per cent in March, which is consistent with the long-term average for the measure at 53.4 per cent. This figure indicates the housing market is in balanced territory. More than 60 per cent of all local markets were in balanced territory in March of this year.
The Aggregate Composite MLS Home Price Index rose 4.6 per cent on a year-over-year basis in March 2018, marking the 11th consecutive deceleration in year-over-year gains. It was also the smallest year-over-year increase since December 2013.
The slowing year-over-year home price growth is largely reflective of trends in the Greater Golden Horseshoe housing markets tracked by the index. Although home prices in this region have stabilized or begun to show inklings of moving higher recently, year-over-year comparisons may deteriorate further due to rapid price gains one year ago.
Apartment units posted the largest annual price increases in March, at 17.8 per cent, followed by townhouse/row units, which saw prices increase by 9.4 per cent. For single-family homes, one-storey homes saw prices climb by 1.3 per cent, while two-storey single family homes saw prices fall by two per cent year-over-year. Despite seeing prices stabilize over the second half of 2017, year-over-year declines for single family home prices may continue over the first half of 2018, as well. Benchmark home prices in March were higher year-over-year in nine of the 14 markets tracked by the Home Price Index, which now includes Edmonton.
The actual (not seasonally adjusted) national average price for a home sold in March 2018 fell 10.4 per cent on an annual basis to just over $491,000. When not including the Greater Vancouver Area or Greater Toronto Area, which are two of the country’s most expensive housing markets, the average price for a home falls almost $108,000, down to $383,000, bringing the year-over-year decline to two per cent.