According to statistics released this week by The Canadian Real Estate Association (CREA), national home sales declined for a third consecutive month in July 2016.
• National home sales fell 1.3% from June to July.
• Actual (not seasonally adjusted) activity came in 2.9% below July 2015.
• The number of newly listed homes rose 1.2% from June to July.
• The MLS® Home Price Index (HPI) rose 14.3% year-over-year in July.
• The national average sale price climbed 9.9% in July from one year ago; net of the Greater Toronto Area (GTA) and Greater Vancouver, it advanced 7% year-over-year.
While national home sales fell 1.3% month-over-month in July, the average price jumped 14.3% year-over-year last month. Newly listed homes, meanwhile, increased 1.2% month-over-month.
Sales activity was down from the previous month in slightly more than half of all markets in July, led by Greater Vancouver and the Fraser Valley. Transactions in these two markets peaked in February of this year, and have since then dropped by 21.5 and 28.8 percent respectively. Accordingly, much of the national sales decline in recent months reflects 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 CREA President Cliff Iverson.
“Home sales continued to trend lower while price gains further accelerated in the Lower Mainland of British Columbia,” said Gregory Klump, CREA’s 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.”
With sales down and new listings up, the national sales-to-new listings ratio eased to 61.6 percent in July 2016 – its second monthly decline following its peak of 65.3 percent in May. A sales-to-new listings ratio between 40 and 60 percent is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.
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. The actual (not seasonally adjusted) national average price for homes sold in July 2016 was $480,743, up 9.9 percent y-o-y.
If these two housing markets are excluded from calculations, the average price is a more modest $365,033 and the gain is trimmed to 7.0 percent y-o-y.