Home sales across the country fell for a third month in a row in November, as two of what had been the hottest markets, the Greater Toronto Area and the Greater Vancouver Area, reported lower activity.
The Canadian Real Estate Association says Canadian home sales through its multiple listing service system dropped by 2.3% last month compared with October as the number of transactions fell in more than half of all local markets.
Sales were down year over year in three-quarters of all local markets including the GTA, the Hamilton-Burlington, Ont., region, B.C.’s Lower Mainland and Calgary.
The group says the number of new listings also saw a decline, falling 3.3% in November.
The drop came as the average price for a home sold last month fell to $488,000, down 2.9% compared with the same month a year ago. Excluding the Greater Toronto Area and the Greater Vancouver area, the average price of a sold home was just under $378,000.
In a forecast, CREA is projecting that home sales in Canada will register a double-digit decline in 2018 and fall to their lowest level seen in five years.
Less housing activity will weigh on GDP
In a CIBC report on Canada’s slowing housing activity resulting from higher mortgage rules and rising rates, deputy chief economist Benjamin Tal says the slower market will drag on economic growth.
“It was a good run while it lasted, but the sun has officially set on the days of heady housing market growth fuelling Canada’s national economy,” he says in the report. The slowdown will “show up in cooler GDP growth readings ahead.”
Those cooler readings could extend over multiple years, as six quarters is the required time for an interest rate hike to fully translate to the economy, according to the central bank’s model. Only five quarters have passed since the first rate hike of this cycle, says Tal.
Despite slower housing activity weighing on GDP, he says market forces suggest home prices will find equilibrium in 2019.