Canadian home sales drop in May following April’s record


Ottawa, ON, June 15, 2016 According to statistics released today by The Canadian Real Estate Association (CREA), national home sales dropped in May 2016 after having set an all-time monthly record in April.

Highlights:

  • National home sales dropped 2.8% from April to May.
  • Actual (not seasonally adjusted) activity was up 9.6% compared to May 2015.
  • The number of newly listed homes fell 3.2% from April to May.
  • The MLS® Home Price Index (HPI) rose 12.5% year-over-year in May.
  • The national average sale price climbed 13.2% in May from one year ago; net of Greater Toronto and Greater Vancouver, it advanced 9.1% year-over-year.

The number of homes trading hands via Canadian MLS® Systems fell by 2.8 percent month-over-month in May 2016 after having broken all previous monthly sales records in April.

Sales activity dropped in May from the previous month in about 70 percent of all markets, led by those in British Columbia and Ontario where the number of homes listed for sale has fallen to multi-year or all-time lows.

“National sales activity is still strong, even after coming off the record levels of the past couple of months,” said CREA President Cliff Iverson. “But, there are housing markets where sales continue to reflect a cautious mood among homebuyers and uncertainty about the local economy,” he added. “All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to in the future.”

“Many of the housing markets in BC and Ontario that led the monthly decline in national sales are also places where months of inventory have fallen to all-time lows,” said Gregory Klump, CREA’s Chief Economist. “This suggests a lack of supply may be starting to rein in sales amid a continuation of strong housing demand.”

Actual (not seasonally adjusted) sales activity was up 9.6 percent year-over-year in May 2016 and stood 15.1 percent above the 10-year average for the month of May.

The number of newly listed homes fell by 3.2 percent in May 2016 compared to April. New supply was down in about two-thirds of all local markets, led by the Fraser Valley, Victoria, Edmonton, Montreal and Quebec City.

The national sales-to-new listings ratio edged up to 64.8 percent in May 2016 – the ratio’s tightest reading since October 2009. 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 ratio was above 60 percent in about half of all local housing markets in May, virtually all of which are located in British Columbia, in addition to housing markets in and around Toronto and across Southwestern Ontario.

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 4.7 months of inventory on a national basis at the end of May 2016, which is unchanged from April’s reading and the lowest level in more than six years. Months of inventory have been trending lower since early 2015, reflecting increasingly tighter housing markets in B.C. and Ontario. It currently sits at or below two months in a growing number of local markets in British Columbia, the GTA and environs and in Southwestern Ontario.

The Aggregate Composite MLS® HPI rose by 12.5 percent on a year-over-year basis in May 2016, the biggest gain since February 2007.

For the fourth consecutive month, year-over-year price growth accelerated for all Benchmark property types tracked by the index.

Two-storey single family home prices continued to post the biggest year-over-year gain (+14.7 percent), followed by one storey single family homes (+12.7 percent), townhouse/row units (+11.6 percent), and apartment units (+8.6 percent).

While 9 of the 11 markets tracked by the MLS® HPI posted year-over-year price gains in May, price growth among housing markets continues to vary widely.

Greater Vancouver (+29.7 percent) and the Fraser Valley (+31.7 percent) posted the largest gains, followed by Greater Toronto (+15.0 percent), Victoria (+13.9 percent), and Vancouver Island (+9.5 percent). By contrast, prices fell by -3.9 percent and -2.3 percent in Calgary and Saskatoon respectively.

Year-over-year price growth advanced further into positive territory in Regina (+3.4 percent) and strengthened further in Ottawa (+1.3 percent) and Greater Montreal (+1.9 percent). Home prices in Greater Moncton recorded their tenth consecutive year-over-year gain, rising 8.2 percent from where they stood one year earlier.

The MLS® Home Price Index (MLS® HPI) provides a better gauge of price trends than is possible using averages because average price is prone to being distorted by changes in the mix of sales activity.

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 May 2016 was $509,460, up 13.2 percent on a year-over-year basis.

If these two housing markets are excluded from calculations, the average price is a more modest $375,532 and the year-over-year gain is trimmed to 9.1 percent.

Even then, this reflects a tug of war between strong average price gains in housing markets around the GTA and in British Columbia versus flat or declining average prices elsewhere in Canada. The average price for Canada net of sales in British Columbia and Ontario in May 2016 was down 0.7 percent year-over-year to $310,007.

All figures in this release except price measures are seasonally adjusted unless otherwise noted. Removing normal seasonal variations enables meaningful analysis of monthly changes and fundamental trends.

– 30 –

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 115,000 REALTORS® working through some 90 real estate Boards and Associations.

Further information can be found at http://www.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
E-mail: pleduc@crea.ca

 

CREA Updates Resale Housing Forecast


Ottawa, ON, June 15, 2016 – 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 2016 and 2017.

Canadian resale housing market trends that defined 2015 have intensified. National sales activity and average prices reached new heights in the first half of 2016 amid a growing supply shortage of single family homes in British Columbia and Ontario, particularly in B.C.’s Lower Mainland as well as in and around the Greater Toronto Area (GTA).

Price gains in these regions stand in contrast to declines in provinces where economic and housing market prospects are closely tied to the outlook for the oil patch and other natural resource industries. Elsewhere, home prices are growing modestly, such as in Ottawa or Montreal.

Activity should begin to rebalance away from B.C. and Ontario, as supply shortages put upward pressure on home prices and constrain transactions even as housing demand remains strong in these provinces and interest rates remain low. Accordingly, sales activity over the second half of the year is expected to ease in B.C., Ontario and on a national basis.

Sales in Alberta, Saskatchewan and Newfoundland & Labrador are expected to struggle to regain traction this year, resulting in continuing softness for home prices. In most other provinces, home sales activity and average prices should improve as their economies strengthen and interest rates remain low.

Nationally, sales activity is forecast to rise by 6.1 per cent to 536,400 units in 2016. This would represent a new annual record, but remain below the peak reached in the 2007 after adjusting for population growth. (Figure A)

British Columbia is forecast to post the largest annual increase in activity (+20.0 per cent) this year, while Alberta is expected the record the largest annual decline in activity (-11.5 per cent). Although housing demand remains strong among many housing markets in Ontario, a lack of supply is projected to constrain the increase in sales activity (+5.2 per cent) this year.

Elsewhere, sales are forecast to rise in Manitoba (+7.1 per cent), Quebec (+5.1 per cent) and Nova Scotia (+5.8 per cent), reflecting anticipated economic improvements in these provinces. In New Brunswick, strong home sales toward the end of last year and a weak start to 2016 is projected to result in a small annual decline in activity this year despite an anticipated improvement in its economic prospects.

In Saskatchewan and Newfoundland & Labrador, where housing market prospects are tied to the outlook for natural resource prices, annual sales activity is forecast to ease by four per cent and one per cent respectively this year.

Prices have continued to push higher in British Columbia and Ontario and sales in these expensive real estate markets have recently hit record highs. Accordingly, CREA’s forecast for the national average price has been revised upward to $490,700 in 2016, representing an annual increase of 10.8 per cent.

Highlighting how provincial sales activity affects the national average price, British Columbia is the only province where the average home price is forecast to climb faster (+13.5 per cent) than the national average in 2016. Ontario’s average price is forecast to rise roughly in line with the national increase.

Elsewhere, average prices in 2016 are forecast to rise by 1.4 per cent in Manitoba, 1.1 per cent in Quebec, 1.4 per cent in New Brunswick, and 0.2 per cent in Nova Scotia. Reflecting recent housing market strength in Prince Edward Island, its average price is forecast to advance by 4.5 per cent in 2016.

The forecast for Alberta’s average price has been revised upward and is now projected to eke out a small gain (+0.6 per cent) this year as the province’s supply of listings continues to be drawn down by sales activity. By contrast, average price is expected to ease in Saskatchewan (-1.4 per cent) and record a marked decline in Newfoundland & Labrador (-8.0 per cent).

In 2017, national sales are forecast to number 537,500 units, which is virtually unchanged (+0.2 per cent) from the forecast for sales this year. Activity in B.C. and Ontario is anticipated to remain strong but unable to match records set this year due to a combination of deteriorating affordability and a lack of supply.

Meanwhile, consumer confidence should begin to strengthen and begin drawing homebuyers off the sidelines in Alberta and Saskatchewan as oil prices improve and their economic prospects strengthen. This should contribute to a modest rebound in sales activity for these provinces in 2017.

British Columbia is projected to post an annual decline of 2.3 per cent in home sales in 2017, while annual sales in Ontario are forecast to edge back by 0.6 per cent in 2017.

By contrast, sales activity is forecast to continue rising in Manitoba, Quebec and Nova Scotia next year, reflecting further anticipated economic improvement in these provinces. Meanwhile, sales in Prince Edward Island are expected to remain near on par with record levels forecast for 2016, as the province’s economy continues to benefit from a lower Canadian dollar.

The national average price is forecast to remain stable (+0.1 per cent or +$400) to $491,100 next year, with modest price gains near or below inflation in most provinces.

Slower national average price growth in 2017 primarily reflects the effect of a projected slowdown in sales activity in British Columbia and Ontario. In these two provinces, luxury sales activity is anticipated to recede from current record levels, resulting in a decline in their share of total sales activity. An ample supply of listings relative to demand will continue to keep price gains in check in other provinces, although inventories have begun to shrink in provinces where supply had been elevated in recent years.

All figures in this release except price measures are seasonally adjusted unless otherwise noted. Removing normal seasonal variations enables meaningful analysis of monthly changes and fundamental trends.

– 30 –

 

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 115,000 real estate Brokers/agents and salespeople working through more than 100 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
E-mail: pleduc@crea.ca