Canadian existing home sales edged lower last month, as a cooling Vancouver resale market offset red-hot activity in Toronto, the Canadian Real Estate Association said Monday.
Home sales through the association's Multiple Listing Service fell 1.5% in February to a seasonally adjusted 42,799. Activity declined mostly in Vancouver, but this was offset by an equally large gain in Toronto.
"The Olympic Winter Games may have impacted February sales activity in British Columbia, so activity for the province in March will be closely watched," said CREA president Dale Ripplinger. The association expects overall activity in Ontario and B.C. to remain strong as buyers look to beat the introduction of harmonized sales taxes in both provinces. Compared to February 2009, residential sales activity was up 44% nationally. However, that year-over-year gain was smaller than the ones recorded in each of the past three months.
The average price tag on a home last month, $335,655, represents an 18.2% increase compared to February 2009. “As with sales activity, this gain was smaller than in the past four months, and year-over-year gains are expected to become further subdued going forward,” CREA said.
The seasonally adjusted number of new listings on the MLS system climbed another 2.4% in February to reach 73,849 units — the highest level recorded since October 2008. Months of available inventory also rose nationally for the third consecutive month to a seasonally adjusted 4.7 months.
This return to near-normal supply level should take some steam out of the market.
"Housing markets are becoming more balanced," said CREA chief economist Gregory Klump. "There are still a number of major markets where sales negotiations favour the seller due to a shortage of inventory, but supply has begun rising.” Evidence of cooling demand combined with moves by the federal government to tighten mortgage rules have deflated what some feared was an emerging housing bubble.
Still, Royal Bank of Canada predicts the cost of owning a home in this country will continue to rise in the coming months as exceptionally low mortgage rates and anticipated interest rate hikes starting mid-year fuel demand.
Canadian homeownership costs increased slightly across all housing segments in the latest quarter, the bank said Monday. "The anticipated and gradual rise in interest rates indicates that affordability is likely to gradually get worse as rates return to normal levels," said Robert Hogue, senior economist at RBC.
"The significant drop in mortgage rates since late 2008 was the principal factor contributing to the overall improvement in housing affordability in the past year."
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