Home sales and prices both continued to soften across the country in November, according to recently released data by the Canadian Real Estate Association (CREA).
Home Sales Slip
Home sales slipped 2.3% from October to November, and were down 12.6% from the same time last year.
“National sales activity has lost a bit of momentum over the past couple of months, but local market trends can be, and very often are, different by comparison,” said CREA President Barb Sukkau.
Still, 75% of local markets saw declining sales, including major centres like Calgary, the Greater Toronto Area and the Lower Mainland of British Columbia. Edmonton is part of the minority that saw higher year-over-year sales.
CREA blames new lending rules for declining home sales, saying the stress test instituted in January reduced affordability for buyers.
At the same time that sales slowed, so did new listings—the number of newly listed homes dipped 3.3% from October to November. When new listings decline further than sales, it causes a key metric, the sales-to-new-listings ratio, to rise, indicating a tighter market. (This metric measures if a market is balanced, or advantaged to the seller or buyer.) November activity caused the national sales-to-new-listings ratio to edge upward to 54.8% from 54.2% in October, but it remains well within the balanced range.
Most of the country, including the GTA, is also balanced.
Another metric CREA uses to measure the competitiveness of a market is the number of months of inventory. At current sales levels, how long would it take to buy up all the houses on market? Currently, the national average is 5.4 months, meaning it would take under six months to gobble up all available housing supply, which is almost exactly the long-term average.
Nevertheless, supply still diverges across the country—it is tight in Ontario, New Brunswick and Prince Edward Island, but balanced out by an excess of inventory in the Prairies and Newfoundland and Labrador.
Mixed Price Data
The average home price is at odds with the the MLS Home Price Index (HPI) benchmark price. The average national home price fell 3% to $488,000 year-over-year ($378,000 without Toronto or Vancouver), while the benchmark price was up 2% year-over-year to $618,800.
This discrepancy has to do with how each is calculated. The average is simply the sum of properties divided by the number sold, while the benchmark price picks a specific time period and then measures against it the rate of price change. It also only looks at 17 key Canadian markets.
The benchmark is considered more accurate than the average because it is not influenced by extremely expensive or low-priced properties; it gives a better picture of the “typical” purchase price.
In a report released on Monday, CIBC economists Benjamin Tal and Royce Mendes expect the housing market will continue to soften into next year.
“The adjustment in the Canadian housing market in general, and in Vancouver and Toronto, in particular, is not over yet, with the Toronto condo market likely to soften in the coming year,” they wrote. “But we believe that market forces suggest prices will find equilibrium next year even if slowing activity continues to weigh on GDP.”
The benchmark price shows significant (over 5%) year-over-year price increases for Vancouver Island, Niagara Region, Victoria, Guelph, Hamilton, Montreal and Ottawa, and price declines in Greater Vancouver, Calgary, Edmonton, Regina, Saskatoon and Barrie.
For more details check out the infographic below: