Canada

Friday, February 15, 2019 - 10:07

MNI:Canada Jan Home Resales Rebound But Y/Y Price Growth Slows


By Yali N'Diaye

OTTAWA (MNI) - Canada's existing home sales unexpectedly rebounded in January, rising 3.6% after three months of declines, the Canadian Real Estate Association reported Friday.

However, the rebound might not reflect a turnaround just yet, as details of the report suggest.

On a 12-month unadjusted basis, existing home sales were still down 4.0%, the weakest month of January since 2015. Sales plunged 39.3% in Greater Vancouver, and edged down 0.2% in Greater Toronto.

Furthermore, despite the monthly sales recovery, year-over-year price growth further slowed in December, with the MLS Home Price Index up 0.8%, the smallest increase since June 2018.

With more stringent stress tests, buyers have turned to more affordable housing alternatives, which has benefitted condominiums, likely explaining the 3.3% gain in apartment prices while one-story single-family home prices fell 1.1%.

On a monthly basis, the HPI was down 0.5%, with Greater Vancouver down 1.2% and Greater Toronto down 0.3%. The national average price fell 2.9% in December to C$471,112 from C$484,950 in November.

"Homebuyers are still adapting to tightened mortgage regulations brought in last year, "said CREA President Barb Sukkau.

Chief Economist Gregory Klump stressed the regional divergences, with the Prairies - the regions most impacted by oil price trends and facing elevated supply relative to sales - experiencing weaker conditions, along with the Lower Mainland British Columbia.

"Sales, market balance and home price trends are out of synch among major Canadian cities that have the greatest impact on national results," Klump said.

The number of months of inventory, for instance, an indicator of market balance, declined to 5.3 from 5.5 the previous month. While the overall reading is in line with the long-term average, it has "swollen far above its long-term average in Prairie provinces and Newfoundland & Labrador."

Meanwhile, the measure remains well below its long-term average in Ontario.

CREA also reported that the number of newly listed homes rose 1% in January, led by Greater Vancouver. As a result, the sales-to-new listings ratio climbed to 56.7% from 55.3%. Compared to long-term averages, half of local markets are balanced, the report said.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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