Canadian home sales activity softens further in November

Ottawa, ON, December 17, 2018 – Statistics released today by the Canadian Real Estate Association (CREA) show national home sales posted another monthly decline in November 2018.

Highlights:

  • National home sales fell 2.3% from October to November.
  • Actual (not seasonally adjusted) activity was down by 12.6% from one year ago.
  • The number of newly listed homes declined by 3.3% from October to November.
  • The MLS® Home Price Index (HPI) was up 2% year-over-year (y-o-y) in November.
  • The national average sale price retreated by 2.9% y-o-y in November.

Home sales via Canadian MLS® Systems fell by 2.3% in November 2018, adding to the decline in October of 1.7%. While the number of homes trading hands is still up from its low point in the spring, it remains below monthly levels posted from 2014 through 2017. (Chart A)

Transactions declined in just over half of all local markets, with lower activity in the Greater Toronto Area (GTA), the Greater Vancouver Area (GVA) and Hamilton-Burlington offsetting increased sales in Edmonton.

Actual (not seasonally adjusted) activity was down 12.6% y-o-y and came in below the 10-year average for the month of November. Sales were down from year-ago levels in three-quarters of all local markets, including the Lower Mainland of British Columbia, Calgary, the GTA and Hamilton-Burlington.

“National sales activity has lost a bit of momentum over the past couple of months, but local market trends can be, and very often are, different by comparison,” said CREA President Barb Sukkau. “All real estate is local. A professional REALTOR® remains your best source for information and guidance in negotiating the purchase or sale of a home during these changing times,” added Sukkau.

“The decline in homeownership affordability caused by this year’s new mortgage stress-test remains very much in evidence,” said Gregory Klump, CREA’s Chief Economist. “Despite supportive economic and demographic fundamentals, national home sales have begun trending lower. While national home sales were anticipated to recover in the wake of a large drop in activity earlier this year due to the introduction of the stress-test, the rebound appears to have run its course.”

The number of newly listed homes fell by 3.3% between October and November, with new supply declining in roughly 70% of all local markets.

With new listings having declined by more than sales in November, the national sales-to-new listings ratio tightened slightly to 54.8% compared to 54.2% in October. This measure of market balance has remained close to its long-term average of 53.4% since the beginning of 2018.

Considering the degree and duration to which market balance readings are above or below their long-term averages is the best way of gauging whether local housing market conditions favour buyers or sellers. Market balance measures that are within one standard deviation of their long-term average are generally consistent with balanced market conditions.

Based on a comparison of the sales-to-new listings ratio with the long-term average, about 60% of all local markets were in balanced market territory in November 2018.

The number of months of inventory is another important measure for the balance between sales and the supply of listings. It represents how long it would take to liquidate current inventories at the current rate of sales activity.

There were 5.4 months of inventory on a national basis at the end of November 2018. While this remains in line with its long-term average of 5.3 months, the number of months of inventory is well above its long-term average in the Prairie provinces as well as in Newfoundland & Labrador. By contrast, the measure is well below its long-term average in Ontario, New Brunswick and Prince Edward Island. In other provinces, sales and inventory are more balanced.

The Aggregate Composite MLS® Home Price Index (MLS® HPI) was up 2% y-o-y in November 2018. The increase is similar to gains posted since July. (Chart B)

Apartment units posted the largest y-o-y price gains in November (+6%), followed by townhouse/row units (+4%). By comparison, one-storey single-family homes posted a modest increase (+0.4%) while two-storey single-family home prices held steady (+0.1%).

Trends continue to vary widely among the 17 housing markets tracked by the MLS® HPI. In British Columbia, home price gains have been steadily diminishing on a y-o-y basis in the Fraser Valley (+4.7%) and Victoria (+7.2%). By contrast, price gains picked up elsewhere on Vancouver Island (+12.6%) and, for the first time in five years, were down (-1.4%) from year-ago levels in the GVA.

Among housing markets tracked by the index in the Greater Golden Horseshoe region, MLS® HPI benchmark home prices were up from year-ago levels in Guelph (+9.3%), the Niagara Region (+7.2%), Hamilton-Burlington (+6.3%), Oakville-Milton (+3.4%) and the GTA (+2.7%). Meanwhile, home prices in Barrie and District remain below year-ago levels (-2.1%).

Across the Prairies, benchmark home prices remained below year-ago levels in Calgary (-2.9%), Edmonton (-1.9%), Regina (-4%) and Saskatoon (-0.3%). Amid elevated supply relative to sales, the home pricing environment will remain weak in these housing markets until they become better balanced.

Home prices rose 6.6% y-o-y in Ottawa (led by a 7.3% increase in two-storey single-family home prices), 6.2% in Greater Montreal (led by a 9.4% increase in townhouse/row unit prices) and 4.2% in Greater Moncton (led by an 11.2% increase in townhouse/row unit prices). (Table 1)

The MLS® HPI provides the best way to gauge price trends because average price trends are strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in November 2018 was just over $488,000, down 2.9% from the same month last year.

The national average price is heavily skewed by sales in Greater Vancouver and the GTA, two of Canada’s most active and expensive markets. Excluding these two markets from calculations cuts almost $110,000 from the national average price, trimming it to just over $378,000.

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PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month. 

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types. 

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale. 

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 125,000 REALTORS® working through some 90 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.

For more information, please contact:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca

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CREA Updates Resale Housing Market Forecast

Ottawa, ON, December 17, 2018 – The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations in 2018 and 2019.

While economic and demographic fundamentals remain supportive for housing demand in many parts of the country, policy headwinds together with rising interest rates are limiting access to mortgage financing and negatively impacting homebuyer sentiment. At the same time, growth in home prices has slowed sharply in some regions. Indeed, home prices are declining in parts of the country where the supply of homes available for purchase is elevated relative to sales.

National home sales are projected to post a double-digit decline in 2018, falling to the lowest level in five years despite supportive population and job growth. In 2019, home sales activity and prices are expected to be held in check by recent policy changes from different levels of government, in addition to additional interest rate increases.

The national forecast has been revised lower since CREA’s September forecast as an anticipated rebound in sales in British Columbia has so far failed to materialize, the recovery in Ontario sales this summer has now run its course and sales activity in Alberta has edged lower. These developments were partially offset by stronger than expected sales activity in Quebec. National sales are now projected to decline by 11.2% to 458,200 units in 2018.

British Columbia and Ontario will account for the lion’s share of the national sales decline in 2018. Alberta, Saskatchewan, Manitoba and Newfoundland and Labrador will also fall to multi-year lows. By contrast, activity remains historically strong in Quebec and in the Maritimes, particularly in New Brunswick.

The national average price is projected to ease to $488,600 this year, down 4.2% from 2017. The decline in the national average home price in 2018 has been mostly compositional, reflecting fewer sales in British Columbia and Ontario, Canada’s two most expensive provinces by a substantial margin. The projected decline in the weighted national average price (weighted by annual sales by province over the past 10 years) amounts to one percent.

More than half of all provinces including British Columbia are projected to post average price gains in 2018. The average price decline forecast for Ontario (-2.6%) largely reflects fewer higher-priced home sales in Toronto, particularly during the spring market, which normally sees a seasonal jump in the average price but failed to materialize this year. By contrast, the seasonal jump in Toronto’s average prices during the spring of 2017 was unusually strong, which contributed to the annual decline in Ontario’s average home price this year.

Meanwhile, home prices in Eastern Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island are expected to continue rising with market balance steadily becoming firmer in recent years.

Home prices are projected to edge down by about 2.5% in Alberta and Saskatchewan and by about 2% in Newfoundland & Labrador. In these provinces, particularly in the latter two, the supply of homes available for sale is elevated relative to sales activity. The imbalance between the two has deteriorated over the past year.

National sales are forecast to remain little changed in 2019 (456,200 units; -0.5%), as rising interest rates combined with the mortgage stress-test offsets continuing population, job and income growth. This forecast would mark a nine-year low for Canadian MLS® Systems home sales. Further activity declines in British Columbia and Alberta are expected to offset a small rebound in Ontario sales and continuing gains in Quebec.

The national average price is forecast to rebound by 1.7% to $496,800 in 2019, reflecting average price growth ahead of consumer price inflation in Ontario, Quebec, New Brunswick and Nova Scotia along with a rebound in Ontario sales activity as a share of overall national sales. More modest gains are forecast for British Columbia, Manitoba and Prince Edward Island. By contrast, prices are forecast to continue to fall in 2019 in Alberta, Saskatchewan and Newfoundland & Labrador.

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About The Canadian Real Estate Association
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations. CREA works on behalf of more than 125,000 REALTORS® who contribute to the economic and social well-being of communities across Canada. Together they advocate for property owners, buyers and sellers.

For more information, please contact:
Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca

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