The Canadian Real Estate Association (CREA) reports that residential property sales activity is up on both a monthly and annual basis. The latest CREA index indicates a 2.8% sales increase in August over the previous month and an 11.1% increase in activity for the year. The national average sales price also increased 8% and market analysts are attributing the growth to a slight easing in credit restrictions and a higher loan approvals rating when compared to last year. Even so, overall activity is still expected to come in below last year’s levels. For more on this continue reading the following article from Property Wire.
Residential property sales in Canada increased by 2.8% in August compared with the previous month, according to the latest index from the Canadian Real Estate Association.
Overall, actual, not seasonally adjusted, activity was 11.1% ahead of levels reported in August 2012 to run roughly in line with the 10 year average, the data also shows.
Sales were up on a year on year basis in about two thirds of local markets, led by double digit gains in Vancouver Island, Victoria, Greater Vancouver, the Fraser Valley, Calgary, Edmonton and Greater Toronto.
The national average price for homes sold in August 2013 was $378,369, an increase of 8.% from the same month last year and CREA said that year on year price gains in recent months reflect outsized sales declines last year among some of Canada’s larger and more expensive markets as a proportion of national activity.
For example, Greater Vancouver’s long term 10 year average proportion of national activity is 7.4% on an unadjusted basis but it had fallen to 4.6% in August 2012. Since then, it has rebounded and now stands at 6.3%, its second-highest level in the past year. If Greater Toronto and Greater Vancouver are removed from the national average price calculation, the year on year increase is cut from 8.1% to 4.8%.
A better gauge of what’s going on with prices is the MLS® Home Price Index, which is not affected by changes in the mix of sales the way that average price is and year on year price growth picked up among all property types tracked by the index.
One story and two story single family homes saw year on year price gains of 3.45% and 3.61% respectively in August. Year on year price growth for town houses, terraces and apartment units remains more modest, with gains of 1.85% and 1.25% respectively in August.
‘Sales activity dropped sharply around this time last year in the wake of tightened mortgage rules and has improved since then, so a sizable year on year increase this August was expected,' said Gregory Klump, CREA’s chief economist.
‘Buyers who put off purchase decisions or who were otherwise sidelined by tighter mortgage rules and lending guidelines implemented last year were anticipated to return to the housing market. That said, the upward trend and levels for activity in recent months has been steeper than expected, but that may not last,’ he explained.
‘Recent increases to fixed mortgage rates caused sales to be pulled forward as buyers with pre-approved financing at lower rates jumped into the market sooner than they might have otherwise. That pool of home buyers has largely evaporated so demand may soften over the fourth quarter. The outsized year on year gains may persist, however, due to weak sales toward the end of last year,’ he added.
The index shows that some 325,180 homes have traded hands across the country so far this year, that is 2.9% below levels recorded in the first eight months of 2012. Notwithstanding the recent upward trend in demand, CREA still expects the 2013 annual sales figure to come in below the 2012 figure.
The number of newly listed homes rose 1.8% on a month on month basis in August and slightly more than half of all local markets recorded gains. As with sales activity, that list includes many of Canada’s most active housing markets.
With sales activity having risen by slightly more than new listings in August, the national sales to new listings ratio edged up to 54.6% compared to 54.1% in July. While the national housing market has firmed slightly in recent months, it remains firmly rooted in balanced market territory where it has been since early 2010.
The number of months of inventory, another important measure of balance between housing supply and demand, stood at 5.9 months at the end of August, down from 6.1 months the previous month.
This article was republished with permission from Property Wire.