Canadian home sales fell 1.3 per cent from June to July 2016, marking the third consecutive month of declines, according to recent data released by the Canadian Real Estate Association (CREA).
Sales activity fell in over half of all markets in July, led by declines in the Greater Vancouver and Fraser Valley areas, where activity peaked in February 2016 and has since fallen by 21.5 and 28.8 per cent, respectively. Recent sales declines can be partly attributed to slowing activity in B.C.’s Lower Mainland.
“National sales and price trends continue to be heavily influenced by a handful of places in Ontario and British Columbia and mask significant variations in local housing market trends and conditions across Canada,” said Cliff Iverson, CREA president, in a press release.
“Home sales continued to trend lower while price gains further accelerated in the Lower Mainland of British Columbia,” added Gregory Klump, CREA chief economist. “This suggests that sales are being reined in by a lack of inventory and a further deterioration in affordability. The new 15 per cent property transfer tax on Metro Vancouver home purchases by foreign buyers took effect on August 2nd, so it will take some time before the effect of the new tax on sales and prices can be observed. That said, the new tax will do little in the short term to increase the supply of homes.”
Actual (not seasonally adjusted) sales activity declined 2.9 per cent year-over-year in July, which is the first year-over-year decline since January 2015 and the largest since April 2013. Sales were down in about 60 per cent of all Canadian markets, including Greater Vancouver, the Fraser Valley, Calgary and Edmonton.
The number of newly listed homes climbed 1.2 per cent month-over-month in July, thanks to increases in Greater Vancouver and the Fraser Valley, Greater Toronto, Calgary and Edmonton. This caused the national sales-to-new listings ratio to fall to 61.6 per cent last month, indicating a sellers’ market.
By the end of July 2016, there were 4.6 months of inventory on a national basis, which is unchanged from readings in May and June, indicating a tight balance between supply and demand for homes. The number of months of inventory has been trending lower since early 2015 due to tighter housing markets in B.C. and Ontario, where some local markets sit near or below two months.
The MLS Home Price Index (HPI) climbed 14.3 per cent year-over-year in July 2016, the largest gain since November 2006. For the sixth month in a row, price growth increased across all benchmark property types tracked by the index. Two-storey single family homes posted price gains of 15.9 per cent, while townhouse units saw increases of 15.3 per cent. Prices of one-storey single family homes grew 14.3 per cent, while apartment units had price increases of 11.1 per cent. Year-over-year price gains were experienced in nine of the 11 markets tracked by the MLS HPI.
The national average home price increased 9.9 per cent year-over-year due to increasing sales activity in Greater Vancouver and Greater Toronto. The actual (not seasonally adjusted) price of a home sold in July 2016 was $480,743. When excluding these two markets from calculations, the average price falls to a more modest $365,033, a 7.0 per cent increase year-over-year.