Home Sales Dip in Canada Indicates Dull Housing Market
Trend continues with dropping sales despite rising prices in most Canadian markets
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OTTAWA - Canadian home sales were up from March but down from a year ago in April, signalling the lacklustre spring market will continue.
The Canadian Real Estate Association said home sales were up 2.7 percent from March to April, boosted by the Vancouver and Toronto markets, but sales through the Multiple Listings Service were down 0.3 percent compared with a year ago and 1 percent below the 10-year average.
“Greater Vancouver and Greater Toronto fuelled the anticipated spring pick up in national home sales in April, which masked softer activity in a number of smaller markets,” CREA president Beth Crosbie said.
But John Andrew, a real estate expert with Queen’s University, said the year-over-year drop in sales was surprising and “fairly significant,” especially when you consider that home prices continued to rise.
The CREA said the national average price for a home sold in April was $409,708, up 7.6 percent from a year ago, with prices up in 6 of the 10 provinces.
The aggregate composite MLS Home Price Index was up 5.02 percent.
“This kind of continues this trend that we’ve been seeing over the past year or so, where prices just continue to rise in most markets in Canada even though sales are actually dropping,” Andrew said.
A long winter that continued until April in most cities can be partly to blame for slow sales, he added, but notes they should have picked up as the weather warmed up in the first few weeks of May.
“We’re seeing a very lacklustre spring market,” he said. “Normally even if you didn’t see a lot of activity, you’d see those listings in April. [Their absence] is almost an early warning that sales are going to be low.”
The national sales-to-new listings ratio was 51.9 percent in April compared with 52 percent in March, suggesting the market was in balanced territory.
Earlier this week, Investors Group created stir in the spring mortgage market when it offered a 36-month closed, variable-rate mortgage at 1.99 per cent—a move observers say could prompt other lenders to lower their rates, and continue to push house prices up.
Concerns have been raised about the health of the Canadian housing market in recent months amid worries it could be overheated and headed for a fall.
However, Bank of Montreal senior economist Sal Guatieri said that “outside a few lingering hotspots, Canada’s housing market is stable, if not boring, which is good in the face of dire warnings about a crash.”
“Strong population growth and healthy economies are driving markets in Alberta, B.C., Saskatchewan, and Greater Toronto, while the opposite appears to be weighing on activity in Quebec and much of Atlantic Canada,” Guatieri said.
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