Canadian home sales dropped sharply in September as prices remained mostly stable compared to last year, according to data released today by the Canadian Real Estate Association (CREA).
Home sales sank almost 9% from last September while the average price increased just 0.2% to $487,000. Excluding the two most expensive markets in the country, Toronto and Vancouver, removes over $100,000 from the national average price, cutting it down to about $383,000.
While sales dropped, new listings also increased, which eased pressure somewhat on prospective buyers.
The number of newly listed homes rose 3% between August and September. The majority of regions across the country posted monthly increases in new listings, which was counterbalanced by the remaining regions posting declines in excess of 3%, CREA reported. Essentially most areas saw an increase in supply, but the tight markets were extremely tight.
The Prairie provinces and Newfoundland and Labrador, for example, have an excess of supply, while inventory is drying up in Montreal and British Columbia’s Fraser Valley due to booming sales.
“Sales activity may get all the press but it’s the balance between that and the number of homes for sale that sets the tone for pricing environment,” said Gregory Klump, CREA’s chief economist. “In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price. However, in places where buyers are keen to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price.”
The national market is still considered balanced, however, with a sales-to-new-listings ratio now at 54.4%, slightly higher than the long-term average of 53.4%. This means neither prospective sellers nor prospective buyers have the upper hand.
Affordability issues likely stemming from new lending regulations that came into effect in January of this year continue to support rapid price growth for the least expensive market segments, leaving behind more expensive property types. To that effect, apartment unit prices grew 8.4% year-over-year while single family homes softened 0.3%.
“The balance between the number of homebuyers and suitable homes varies depending on location, housing type, and price range,” said CREA President Barb Sukkau. “The difference in market balance will likely come into sharper focus as interest rates rise and cause this year’s new mortgage stress test to become even more restrictive.”
Check out the infographic below to see how Canadian cities stack-up against each other: