Ottawa, ON, September 15, 2017 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales posted a small gain in August 2017.
- National home sales rose 1.3% from July to August.
- Actual (not seasonally adjusted) activity stood 9.9% below last August’s level.
- The number of newly listed homes fell a further 3.9% from July to August.
- The MLS® Home Price Index (HPI) was up 11.2% year-over-year (y-o-y) in August 2017.
- The national average sale price climbed by 3.6% y-o-y in August.
The number of homes sold via Canadian MLS® Systems edged up by 1.3% in August 2017. The small gain breaks a string of four straight declines, but still leaves activity 13.8% below the record set in March.
There was a roughly even split between the number of local markets where sales posted a monthly increase and those where activity declined. The monthly rebound in Greater Toronto Area (GTA) (14.3% month-over-month) sales fueled the national increase. For Canada net of the GTA, sales activity was flat. While it was the first monthly increase in activity since Ontario’s Fair Housing Policy was announced, GTA sales activity remained well down compared to the peak reached in March (-36%) and year-ago levels (-32%).
Actual (not seasonally adjusted) activity was down 9.9% on a y-o-y basis in August 2017. Sales were down from year-ago levels in about 60% of all local markets, led by the GTA and nearby housing markets.
“Experience shows that home buyers watch mortgage rates carefully and that recent interest rate increases will prompt some to make an offer before rates move higher, while moving others to the sidelines,” said CREA President Andrew Peck. “All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to.”
“Time will tell whether the monthly rise in August sales activity marks the beginning of a rebound, particularly in the Greater Golden Horseshoe region and other higher-priced urban centres,” said Gregory Klump, CREA’s Chief Economist. “The picture will become clearer once mortgages that were pre-approved prior to recent interest rate hikes expire.”
The number of newly listed homes slid a further 3.9% in August, marking a third consecutive monthly decline. The national result largely reflects a reduction in newly listed homes in the GTA, Hamilton-Burlington, London-St. Thomas and Kitchener-Waterloo, as well as the Fraser Valley.
With sales up and new listings down in August, the national sales-to-new listings ratio rose to 57% compared to 54.1% in July. A national sales-to-new listings ratio of between 40% and 60% is generally consistent with balanced national housing market, with readings below and above this range indicating buyers’ and sellers’ markets respectively.
That said, the rule of thumb varies according to local market level. Considering the degree and duration to which current market balance in each local market is above or below its long-term average is a more sophisticated way of gauging whether local conditions favour buyers or sellers. (Market balance measures that are within one standard deviation of the long-term average are generally consistent with balanced market conditions).
Based on a comparison of the sales-to-new listings ratio with its long-term average, some 70% of all local markets were in balanced market territory in August 2017, up from 63% the previous month. A decline in new listings has firmed market balance in a number of Greater Golden Horseshoe housing markets where it had recently begun tilting toward buyers’ market territory.
The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity.
There were 5 months of inventory on a national basis at the end of August 2017, down from 5.1 in July and slightly below the long-term average of 5.2 months.
At 2.3 months of inventory, the Greater Golden Horseshoe region is up sharply from the all-time low of 0.8 months reached in February and March just before the Ontario government announced housing policy changes in April. However, it remains well below the long-term average of 3.1 months. (Chart A)
The Aggregate Composite MLS® HPI rose by 11.2% y-o-y in August 2017, representing a further deceleration in y-o-y gains since April. The deceleration in price gains largely reflects softening price trends in Greater Golden Horseshoe housing markets tracked by the index. (Chart B)
Price gains diminished in all benchmark categories, led by two-storey single family homes. Apartment units posted the largest y-o-y gains in August (+19.5%), followed by townhouse/row units (+14.4%), two-storey single family homes (+8.3%), and one-storey single family homes (+8.1%).
While benchmark home prices were up from year-ago levels in 12 of 13 housing markets tracked by the MLS® HPI, price trends continued to vary widely by region.
After having dipped in the second half of last year, benchmark home prices in the Lower Mainland of British Columbia have recovered and are now at new highs (Greater Vancouver: +9.4% y-o-y; Fraser Valley: +14.8% y-o-y).
Benchmark home price increases have slowed to about 16% on a y-o-y basis in Victoria, and are still running at about 20% elsewhere on Vancouver Island.
Price gains slowed further on a y-o-y basis in Greater Toronto, Oakville-Milton and Guelph; however, prices in those markets remain well above year-ago levels (Greater Toronto: +14.3% y-o-y; Oakville-Milton: +11.4% y-o-y; Guelph: +19.5% y-o-y).
Calgary benchmark price growth remained in positive territory on a y-o-y basis in August (+0.8%). While Regina home prices popped back above year-ago levels (+5.6% y-o-y), Saskatoon home prices remain down (-0.3% y-o-y). That said, prices of late have been trending higher in both Regina and Saskatoon and if recent trends hold, Saskatoon prices will also turn positive on a y-o-y basis before year-end.
Benchmark home price growth accelerated in Ottawa (+5.9% y-o-y overall, led by a 7% increase in one-storey single family home prices) and was up in Greater Montreal (+4.6% y-o-y overall, led by a 7.1% increase in prices for townhouse/row units). Prices were up 5.1% overall in Greater Moncton, led by a 7.9% y-o-y gain in townhouse/row prices. (Table 1)
The MLS® Home Price Index (MLS® HPI) provides the best way of gauging price trends because average price trends are prone to being 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 August 2017 was $472,247, up 3.6% from where it stood 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 almost $100,000 from the national average price ($373,859).
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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 120,000 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
Ottawa, ON, September 15, 2017 – 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 2017 and 2018.
Housing market trends continue to diverge considerably among regions along four general themes: British Columbia; the Greater Golden Horseshoe; oil and natural resource dependent provinces; and everywhere else.
In Ontario, housing market sentiment has sidelined more buyers than was previously anticipated following changes to provincial housing policies aimed at reining in housing markets in the Greater Golden Horseshoe region announced in April. Activity has begun to show tentative signs of stabilizing among markets in the region, but is down sharply since March amid a rapid shift in housing market balance and increased cautiousness among homebuyers. Because the region is home to a quarter of the Canadian population, changes in sales activity there have a large influence on results for the province and nationally.
The downward revision in the national sales forecast primarily reflects the drop in Ontario home sales, which are projected to rebound only partially later this year. Because home prices in the Greater Golden Horseshoe region are well above those in much of the rest of Canada, the decline in Ontario’s share of national sales is also responsible for much of the downward revision in the national average price forecast.
In British Columbia, activity appears to be stabilizing somewhere in between the highs of early 2016 and the lows of late 2016 and early 2017. Meanwhile, sales activity is still running at lower levels while supply remains elevated in the natural resource-intensive provinces of Alberta, Saskatchewan, and Newfoundland and Labrador. This has resulted in somewhat softer price trends in the two western provinces and more pronounced price declines in Newfoundland and Labrador.
To varying degrees, housing markets in Manitoba, Northern and Eastern Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island had a breakout year in 2016, with rising sales drawing down previously elevated levels of supply. Inventories in these regions have continued to decline this year.
Tightened mortgage rules, higher mortgage default insurance premiums, changes to Ontario housing policies and higher interest rates are factors that will continue to lean against housing market activity over the rest of the year and into 2018. Additional interest rate increases and further tightening of mortgage regulations represent downside risks to the sales forecast, while improving Canadian economic fundamentals represent upside risks.
Nationally, sales activity is forecast to decline by 5.3% to 506,900 units in 2017, which represents a drop of more than 20,000 transactions from CREA’s forecast published in June. The decline stems almost entirely from the downward revision to the forecast Ontario home sales. Sales in British Columbia and Ontario are both now projected to decline by about 10% in 2017 compared to all-time records set in 2016.
Newfoundland & Labrador is also forecast to see a sizeable decline in sales in 2017 (-8.1%), continuing a softening trend that stretches back nearly a decade. A smaller decline in activity is forecast for Saskatchewan (-4%).
Alberta is still projected to post the largest increase in activity in 2017 (+7.4%); however, the increase still leaves sales below the provincial 10-year average.
Sales this year are also forecast to rise in Quebec (+5.4% and New Brunswick (+5.7%), rise modestly in Manitoba, Nova Scotia, and remain little changed in Prince Edward Island.
Manitoba and Quebec are the only two provinces expected to set new annual sales records in 2017, while sales in New Brunswick and Prince Edward Island are on track to come in just short of all-time record levels.
The national average price is forecast to rise by 3.4% to $506,700 in 2017. This marks a downward revision to the previous forecast, mostly reflecting fewer high priced sales in the Greater Golden Horseshoe region.
While Ontario is still forecast to post a sizeable year-over-year gain in 2017 (+8.7%), this is a large downward revision to the previously forecast increase.
Prince Edward Island is expected to post a similar average home price gain in 2017 (+7.4%), followed by Quebec (+4.5%), New Brunswick (+4.4%), Nova Scotia (+3.5%), Manitoba (+2.8%), British Columbia (+2.2%) and Alberta (+1.2%).
Newfoundland and Labrador (-4.3%) and Saskatchewan (-1.6%) are the only provinces where average price is projected to decline in 2017, in line with elevated supply relative to demand in these provinces.
In 2018, national sales are forecast to number 495,100 units, representing a decline of 2.3% compared to the 2017 forecast. As is the case this year, most of the annual decline in sales next year reflects an expected decline in Ontario sales, with activity anticipated to remain well below the record-levels logged in early 2017.
The national average price is forecast to edge lower by 0.6% to $503,500 in 2018, in large part reflecting a record number of high-end home sales in and around Toronto in early 2017 that is not expected to reoccur in 2018.
Further expected interest rate increases will hold sales in check in the Greater Vancouver and Toronto Areas. As a result, the average price is forecast to hold steady in 2018 in British Columbia and edge back by 1.1% in Ontario.
In an extension of trends for 2017, average prices in 2018 are forecast to rise by more than the rate of consumer price inflation in Quebec and New Brunswick, decline further in Saskatchewan and Newfoundland and Labrador and either remain little changed or rise modestly next year in all other provinces.
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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, representing more than 120,000 real estate Brokers/agents and salespeople working through more than 90 real estate Boards and Associations.
For more information, please contact:
Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460