The Canadian Real Estate Association has updated its forecast for home sales activity for the rest of 2014 and 2015.
The deferral of sales and listings during an extraordinarily bleak winter delayed the start to the spring home buying season earlier this year. However, CREA says activity rose in May and June since properties were snapped up after they finally hit the market.
This boost was and still is expected to be transitory, it adds, but sales have yet to show signs of cooling. This reflects continuing strength in home sales among large urban markets across the country.
As such, CREA says sales are now forecast to reach 475,000 units in 2014, representing an increase of 3.8% compared to 2013. This is upwardly revised from the organization’s forecast of 463,400 sales published in June, and reflects stronger than expected sales in recent months.
This would place activity in 2014 slightly above (but still broadly in line with) CREA’s ten-year average. Despite periods of monthly volatility since the 2008-2009 recession, annual activity has remained stable within a fairly narrow range around its ten-year average.
British Columbia is forecast to post the largest year-over-year increase in activity (11.9%), followed closely by Alberta (7.7%). Demand in both of these provinces is currently running at multi-year highs.
Meanwhile, activity in Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick is expected to come in roughly in line with 2013 levels, with sales increases ranging between 1% and 2% in the first three provinces, and edging lower by about 1% lower sales in the latter two provinces.
Sales in Nova Scotia and in Newfoundland are projected to be down this year by 3.9% and 5.2%, respectively.
Further, CREA says mortgage interest rates are expected to edge higher as Canadian exports, business investment, job growth, and incomes improve. These opposing factors should benefit housing markets, where demand has been softer but prices have remained more affordable.
Sales in relatively less affordable housing markets are likely to be more sensitive to these higher, fixed mortgage rates.
The national average home price is projected to rise by 5.9% to $405,000 in 2014, with similar price gains in British Columbia, Alberta, and Ontario. Increases of just below 3% are forecast for Saskatchewan, Manitoba and Prince Edward Island.
Newfoundland and Labrador is forecast to see average home price rise by about 1% this year, while Quebec is forecast to see an increase half that size.
Prices are forecast to be flat in New Brunswick, and they’ll recede by nearly 2% in Nova Scotia.
The national average price is forecast to edge up a further 0.7% in 2015 to $407,900. Alberta and Manitoba are forecast to post average price gains of almost 2% in 2015, followed closely by Ontario at 1.3%. Average prices in other provinces are forecast to remain stable, edging up by less than one percentage point.