National home sales and prices softened this October, according to recently released data by the Canadian Real Estate Association (CREA).
Home sales edged down 3.7% year-over-year and 1.6% from September to October. Sales slowed in over half of local markets, especially in Greater Vancouver and the Fraser Valley, which offset slight gains elsewhere, like in Montreal and the Greater Toronto Area.
“National sales activity lost momentum in October,” said Gregory Klump, CREA’s chief economist.
Meanwhile, prices slipped 1.5% year-over-year to $496,800. Removing the highest-priced markets in the country, the GVA and GTA, cuts $114,000 from the average price, leaving it at a more modest $383,000.
Home prices rose in regions surrounding both Vancouver and Toronto, and also in smaller cities like Ottawa, Montreal and Moncton, but sank in all major Prairie cities due to a glut of inventory.
The national market remains balanced and is tilted neither in favour of seller or buyer. The ratio between sales and new listings, the tool used to measure market conditions, is at 54.2%, close to its long-term average of 53.4%.
As has been the case all year, the least expensive market segments are showing the strongest price growth.
This is likely due to the federal bank regulator instituting a stress test on borrowers in 2018, requiring them to qualify at their contract rate plus two percentage points or the Bank of Canada’s five-year benchmark rate, whichever is higher. The benchmark rate rose once in 2018, in May to 5.34% from 5.14%, and several times since January 2017 when it was just 4.64%.
It could simply be that Canadians are now unable to borrow enough to get them into the more expensive single-family-type homes.
To that end, apartment prices rose 7.4% while one-storey single-family homes rose just 0.6% and two-storey homes remained stable.
Check out the infographic below for all the details: