Canadian home sales and prices dropped last month

Canadian home sales fell in October, as the number of transactions dropped in more than half of all local markets—led by dips in Montreal, Edmonton and the Hamilton-Burlington, Ont., area.

The Canadian Real Estate Association says national home sales through its MLS system dropped 1.6% last month compared with September. The number of new listings also dipped in October, by 1.1%, led by declines in the Greater Toronto Area, Calgary and Victoria.

Compared with October 2017, sales last month were down 3.7% as lower sales in the Vancouver region and the B.C. Fraser Valley more than offset gains in the Greater Toronto Area and Montreal.

The drop came as the average price for a home sold last month fell 1.5% from October last year, to $496,800.

Excluding the Greater Toronto Area and the Greater Vancouver area, two of the country’s most expensive markets, the average price of a home sold was just under $383,000.

As of the end of October, the number of months of inventory on a national basis was 5.3. This measure shows the balance between the sales and the supply of listings, and it represents how long it would take to liquidate current inventories at the current rate of sales activity, says CREA in a release.

That inventory level remains in line with the long-term national average, CREA adds, but not all provinces are well-balanced. The number of months of inventory is higher in the Prairie provinces and in Newfoundland & Labrador, and lower in Ontario and Prince Edward Island.

More on home prices

For the month of October, National Bank’s Teranet–National Bank Composite National House Price Index slipped 0.4%.

In a report, the bank says only Montreal recorded a price increase (+0.2%) for the month out of the 11 areas it measures. The other cities are Victoria (-0.1%), Toronto (-0.2%), Winnipeg (-0.2%), Calgary (-0.3%), Ottawa-Gatineau (-0.4%), Hamilton (-0.5%), Edmonton (-0.7%), Vancouver (-0.8%), Quebec City (-1.0%) and Halifax (-1.0%).

Yet, on a year-over-year basis, the index rose 2.8%, with gains in eight areas ranging between 1.9% (Toronto) and 5.2% (Victoria). Prices in Edmonton, Quebec City and Calgary fell by 0.5%, 0.6% and 1.4%, respectively.

The bank suggests looking at each city individually, given “the market is far from being homogeneous.” While Vancouver prices, on a seasonally adjusted basis, haven’t risen for five straight months and the city is experiencing weakness across various types of real estate, the picture is more mixed for Toronto, where condo prices remain “on an upward trend.”

One factor to consider going forward, the report says, is interest rates. As those rise, “we don’t see much upside for home prices,” the report says.

The Bank of Canada’s latest rate increase—and third for 2018—came in October, when it hiked its overnight target rate to 1.75%. It cited a solid global outlook and more balanced growth in Canada.

Also read: Can your client afford a mortgage as rates rise?

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.