CNW—According to statistics released today by the Canadian Real Estate Association (CREA), national home sales were up on a month-over-month basis in October 2016. The number of homes trading hands via Canadian MLS Systems rose 2.4 per cent month-over-month in October 2016.
Activity was up on a month-over-month basis about 60 percent of all local markets, led by the Fraser Valley, Calgary, Edmonton, Hamilton-Burlington and Montreal.
“The expanded stress-test for home buyers who need mortgage default insurance took effect in the middle of October,” said CREA president Cliff Iverson. “More time will need to pass before its effect on housing markets can be gauged. The extent to which they will push first-time homebuyers to the sidelines may vary among housing markets.”
“First-time homebuyers looking to get into the market before having to face tougher mortgage eligibility criteria had only two weeks to do so following the finance minister’s announcement of tighter mortgage regulations in early October,” said Gregory Klump, CREA’s chief economist. “Early evidence suggests that the influence of tighter mortgage regulations on sales activity has been mixed.
“The federal government will no doubt want to monitor the effect of new mortgage regulations on the many varied housing markets across Canada and on the economy, particularly given the recent rise in uncertainty about economic growth prospects following the U.S. presidential election.”
Actual (not seasonally adjusted) sales activity rose 2 per cent yeat-over-year in October 2016 to set a record for the month, edging out the previous record set back in October 2009 by just 0.8 per cent.
Transactions were up from year-ago levels in about 60 percent of all Canadian markets, with activity gains in the GTA and environs offset by year-over-year declines in B.C.’s Lower Mainland.
The number of newly listed homes climbed 1.7 per cent in October 2016 compared to September. Led by a marked increase in the GTA, new listings were up from the previous month in about 60 per cent of all local markets.
With sales having risen by slightly more than new listings in October, the national sales-to-new listings ratio edged higher to 62.9 per cent compared to 62.4 per cent in September. A sales-to-new listings ratio between 40 and 60 per cent is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.
The ratio was above 60 per cent in half of all local housing markets in October, the vast majority of which continue to be located in British Columbia in and around the GTA and across Southwestern Ontario. The ratio has moved out of sellers’ market territory and into the mid-50 per cent range in Greater Vancouver.
The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity. There were 4.5 months of inventory on a national basis at the end of October 2016 – the lowest level in almost seven years.
The tight balance between housing supply and demand in Ontario’s Greater Golden Horseshoe region is without precedent (including the GTA, Hamilton-Burlington, Oakville-Milton, Guelph, Kitchener-Waterloo, Cambridge, Brantford, the Niagara Region, Barrie and nearby cottage country). In October, the number of months of inventory ranged between one and two months in many of these housing markets, and has slipped to below one month in Mississauga, the Durham Region, Orangeville, Cambridge and Guelph. The Aggregate Composite MLS HPI rose by 14.6 per cent year-over-year in October 2016, up from 14.4 per cent in September.
On a year-over-year basis, price growth accelerated for two-storey single family homes and apartment units while slowing for townhouse/row units.
Benchmark prices for two-storey single-family homes and townhouse/row units posted the biggest year-over-year gains in October 2016 (16.7 per cent and 16.0 per cent respectively). Price increases were not far behind for one-storey single-family homes (14.0 per cent) and apartment units (11.4 per cent).
While prices in nine of the 11 markets tracked by the MLS HPI posted year-over-year gains in October, increases continue to vary widely among housing markets.
Greater Vancouver (+24. 8 per cent) and the Fraser Valley (+32.5 per cent) posted the largest year-over-year, although single family home prices in both of these markets are now off peak.
Double-digit year-over-year percentage price gains were also registered in Greater Toronto (+19.7 per cent), Victoria (+20.1 per cent) and Vancouver Island (+15.8 per cent). By contrast, prices were down 4.1 percent year-over-year in Calgary. Although home prices there have held mostly steady since May, they have been below year-ago levels since August 2015 and are down 5.1 per cent from the peak reached in January 2015. The MLS Home Price Index 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 October 2016 was up 5.9 per cent year-over-year to $481,994.
The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets.
That said, Greater Vancouver’s share of national sales activity has diminished considerably of late, resulting in it having less upward influence on the national average price. Even so, the average price is reduced by more than $120,000 to $361,012 if Greater Vancouver and Greater Toronto sales are excluded from calculations.