CANADA – Statistics released by The Canadian Real Estate Association (CREA) show national home sales fell sharply in January 2018, although the west coast market continued strong.
Highlights:
- National home sales declined by 14.5 per cent from December 2017 to January 2018.
- Actual (not seasonally adjusted) activity was down 2.4 per cent year-over-year (y-o-y) in January;
- The number of newly listed homes plunged 21.6 per cent from December 2017 to January 2018;
- The MLS Home Price Index (HPI) in January was up 7.7 per cent y-o-y; and
- The national average sale price advanced by 2.3 per cent year y-o-y.
Home sales via Canadian MLS System dropped sharply in January after having climbed to the highest monthly level on record in December. Although activity retreated to the lowest monthly level in three years, January sales were on par with the 10-year monthly average.
Activity in January was down in three-quarters of the local markets in Canada, including virtually all major urban centres. Many of the larger declines in percentage terms were posted in Greater Golden Horseshoe (GGH) markets in Ontario, where sales had picked up late last year following the announcement of tighter mortgage rules coming into effect in January.
Actual, not seasonally adjusted, activity was down 2.4 per cent from January 2017 and stood close the 10-year average for the month of January. Sales came in below year-ago levels in about half of all local markets, led by those in the GGH region.
By contrast, sales were up on a y-o-y basis in the Lower Mainland of British Columbia and Vancouver Island, the Okanagan Region, Edmonton, Montreal, Greater Moncton and Halifax-Dartmouth.
“The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion,” said CREA President Andrew Peck. “At the same time, the changes do nothing to address government concerns about home prices that stem from an ongoing supply shortage in major markets like Vancouver and Toronto.
“Unless these supply shortages are addressed, concerns will persist,” he added.
“The decline in January sales provides clear evidence that the strength in activity late last year reflected a pull-forward of transactions, as rational homebuyers hurried to purchase before mortgage rules changed in 2018,” said Gregory Klump, CREA’s Chief Economist. “At the same time, a large decline in new listings prevented market balance from shifting in favour of homebuyers.”
The number of newly listed homes plunged 21.6 per cent in January to reach the lowest level since the spring of 2009. New supply was down in about 85 per cent of all local markets, led by a sizeable decline in the greater Toronoto area.
Large percentage declines in supply were also recorded in the Lower Mainland of British Columbia and Vancouver Island, the Okanagan Region, Hamilton-Burlington, Oakville-Milton, Kitchener-Waterloo, London and St. Thomas, Kingston and Ottawa.
With new listings having fallen by more than sales, the national sales-to-new listings ratio tightened to 63.6 per cent in January compared to the mid-to-high 50 per cent range to which it held since last May.
A national sales-to-new listings ratio of between 40 per cent and 60 per cent is generally consistent with a balanced national housing market, with readings below and above this range indicating buyers’ and sellers’ markets respectively. That said, the balanced range can vary among local markets.
The number of months of inventory is another important measure for the balance between housing supply and demand. It represents how long it would take to liquidate current inventories at the current rate of sales activity.
There were 5 months of inventory on a national basis at the end of January 2018, which is close to the long-term average of 5.2 months.
Apartment units again posted the largest y-o-y price gains in January, up 20.1 per cent; followed by townhouse/row units, up 12.3 percent; one-storey single family homes, up 4.3 per cent; and two-storey single family homes, up 2.3 per cent.
As was the case in December, benchmark home prices in January were up from year-ago levels in nine of the 13 markets tracked by MLS.
Composite benchmark home prices in the Lower Mainland of British Columbia continue to trend higher. Year-over-year, greater Vancouver prices were up 16.6 per cent and Fraser Valley prices were up 22.4 per cent.
Apartment units have been driving the trend up in recent months, with single family home prices having stabilized.
In Victoria, benchmark home prices rose by about 14 per cent year-over-year. Prices rose about 20 per cent elsewhere on Vancouver Island. These gains are similar to those recorded during the fourth quarter of last year.
The actual, not seasonally adjusted, national average price for homes sold in January 2018 was just over $481,500, up 2.3 per cent from one year earlier. The national average price is heavily skewed by sales in Greater Vancouver and Greater Toronto, two of Canada’s most active and expensive markets. Excluding these two markets from calculations trims $107,500 from the national average price, reducing it to $374,000.
