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Stronger national sales activity recorded in July

Thursday, August 23, 2018

Canadian home sales climbed 1.9 per cent from June to July 2019, according to statistics released by the Canadian Real Estate Association (CREA). Stronger home sales activity was built on increases in each of the two previous months, but was still below levels recorded from mid-2013 to the end of 2017. Led by the Greater Toronto Area (GTA), over half of all local housing markets reported an increase in monthly home sales activity in July.

Actual (not seasonally adjusted) activity fell 1.3 per cent year-over-year, reflecting fewer sales in major urban centres in British Columbia and an offsetting improvement in activity in the GTA.

“This year’s new stress test on mortgage applicants continues to weigh on home sales but its effect may be starting to fade slighting in Toronto and nearby markets,” said Barb Sukkau, CREA president, in a press release. “The degree to which the stress test continues to sideline home buyers varies depending on location, housing type and price range.”

“Improving national home sales activity in recent months obscures significant differences in regional trends for home sales and prices,” added Gregory Klump, CREA’s chief economist. “Regardless, rising interest rates and this year’s stress test on mortgage applicants will likely prove to be difficult hurdles to overcome for many would-be first time and move-up homebuyers, heading into the second half of the year and beyond.”

The number of newly listed homes declined by 1.2 per cent from June to July, remaining below monthly levels recorded over most of the past eight years. New listings fell in more than half of all local housing markets, led by Calgary, Edmonton and Greater Vancouver. Fewer new listings in these markets more than balanced out the increase in new supply in the GTA.

As home sales increased and new listings fell, the national sales-to-new listings ratio tightened to 55.9 per cent in July. Based on a comparison of the sales-to-new listings ratio with the long-term average, about two-thirds of all local housing markets were in balanced territory in July 2018. On a national basis, there were 5.3 moths of inventory at the end of July 2018, a decline from 5.4 months in June, but hovering near the long-term average of 5.2 months.

The Aggregate Composite MLS Home Price Index climbed 2.1 per cent year-over-year in July 2018, marking the first acceleration in annual home price growth since April 2017. It also hints that last summer’s decline in home prices and their rebound in and around the GTA that followed may contribute to further annual gains in the coming months.

The largest year-over-year price gains were experienced by apartment units, which saw prices increase by an average of 10.1 per cent, followed by townhouse/row units, with increases of 4.7 per cent. Meanwhile, one-storey and two-storey single family home prices were again down on an annual basis (-0.7 per cent and -1.5 per cent, respectively), but these declines were smaller than in recent months.

Home prices were up in eight of the 15 housing markets tracked by the MLS HPI, while home prices in two markets remained relatively level. The remaining five housing markets saw prices decline.

Home price gains are declining on an annual basis in the Greater Vancouver Area (+6.7 per cent), Fraser Valley (+13.8 per cent), Victoria (+8.2 per cent) and elsewhere on Vancouver Island (+13.7 per cent).

In the Greater Golden Horseshoe, home prices remain elevated from year-ago levels in Guelph (+4.1 per cent), while they stabilized in Oakville-Milton (+0.1 per cent). In the GTA and Barrie and District, however, home prices declined on a year-over-year basis (-0.6 per cent and -3 per cent, respectively).

Prairie regions saw benchmark home prices remain down on an annual basis, with Calgary, Edmonton, Regina and Saskatoon all experiencing declines (-1.7 per cent, -1.3 per cent, -4.8 per cent and -2.1 per cent, respectively).

In Ottawa, however, benchmark home prices increased by 7.2 per cent year-over-year, led by an 8.3 per cent increase in two-storey single family home prices. Greater Montreal home prices increased by 5.7 per cent year-over-year, led by a 7 per cent increase in townhouse/row unit prices, while Greater Moncton’s 5 per cent home price increase was led by a 9.9 per cent increase in apartment unit prices.

The actual (not seasonally adjusted) national average price for homes sold in July 2018 was just below $481,500, an increase of one per cent year-over-year, marking the first year-over-year increase since January.

When removing the Greater Vancouver and Greater Toronto Areas from calculations, due to their active and pricey housing markets, the national average price in July 2018 sat at just under $383,000.

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