Canadian home sales fell 5.3 per cent from October to November, according to statistics recently released by the Canadian Real Estate Association (CREA). This represents the largest monthly drop in activity since August 2012.
Activity was down month-over-month in about two-thirds of all local markets, including in Toronto and Vancouver, which are Canada’s most active markets.
“November was the first full month in which the expanded stress-test was in effect for home buyers with less than a twenty percent down payment,” said CREA President Cliff Iverson in a press release. “The government’s newly tightened mortgage regulations have dampened a wide swath of housing markets, including places not targeted directly by the government’s latest regulatory measures. The extent to which they pushed first-time home buyers to the sidelines varies among housing markets. “
“Canadian housing market results for November suggest that Canada’s housing sector is unlikely to be as strong a source for economic growth as compared to before mortgage regulations were recently tightened,” added Gregory Klump, CREA chief economist. “Housing activity generates a lot of spin-off spending, which makes its weakened prospects an additional source of uncertainty as regards the outlooks for Canadian economic and job growth.”
Actual (not seasonally adjusted) sales activity remained 1.6 per cent higher than November 2015 levels, which represents the smallest year-over-year increase since October 2015. Heightened activity in the Greater Toronto Area (GTA) and vicinity were dampened by declines in the Lower Mainland of B.C.
The number of newly listed homes fell 0.4 per cent in November 2016 compared to October. New listings increased from the previous month in nearly half of all local markets, led by the GTA.
The national sales-to-new listings ratio fell to 59.8 per cent in November, down from 62.9 per cent in October, representing a more balanced housing market than in previous months. However, the ratio was over 60 per cent in almost half of all local housing markets in November, most of which are located in British Columbia, in and around the GTA and across Southwestern Ontario.
The Aggregate Composite MLS home price index increased by 14.4 per cent year-over-year in November 2016, down from 14.6 per cent in October. This reflects a slowdown in single family home price appreciation.
Benchmark prices for two-storey single family homes and townhouse units posted gains of 16.3 per cent and 16 per cent, respectively, representing the largest year-over-year gains in November 2016. Meanwhile, the average price for a one-storey single family home increased by 13.7 per cent, while the price of an apartment unit climbed 11.5 per cent.
The actual (not seasonally adjusted) national average price for homes sold in November 2016 increased by 7.3 per cent year-over-year to $489,591. The price continues to be inflated due to the active housing markets of the Grater Vancouver and Greater Toronto Areas, despite Greater Vancouver’s recently diminished sales activity. With the Greater Vancouver and Greater Toronto Areas are removed from the equation, the average price of a home sits at a more reasonable $361,260.
