The Canadian Real Estate Association reports that property sales and prices were on the rise in June. The 3.2% jump in sales for the month is the fourth consecutive monthly increase and reflected improvement in two-thirds of all Canadian markets. Experts believe the 5% increase in national average home prices is due to recovering demand that saw a falloff in purchase activity in the last year, particularly in the Greater Vancouver area. Analysts note that the MLS Home Price Index reflects overall stability in the Canadian real estate market over the course of the year to date. For more on this continue reading the following article from Property Wire.
The national average sale price in Canada has increased by almost 5% year on year and sales are up 3.2% on a monthly basis, according to the latest data from the Canadian Real Estate Association (CREA).
The actual, not seasonally adjusted, national average price for homes sold in June 2013 was $386,585, an increase of 4.8% from the same month last year.
Year on year price growth picked up for two storey single family homes with a rise of 3% but slowed for all other benchmark property types tracked by the index. Prices for one storey single family homes were up 3.1% year on year in June, followed by town house and terraced properties up 1.6% and apartment units with an increase of 0.4%.
The increase in sales in June was the fourth consecutive monthly increase, with activity now running 11% above where it stood in February.
Home sales improved in two thirds of all local markets in June, including almost all large urban markets. The biggest gains were reported in Victoria, Greater Vancouver, the Fraser Valley, Edmonton, Saskatoon, Winnipeg and Montreal.
‘For the second month in a row, sales improved in the majority of local markets. Whether those gains reflect temporary factors or a fundamental improvement after a slow start to the year really depends on where you are,’ said CREA president Laura Leyser.
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Increases in mortgage interest rates probably prompted some buyers with pre-approved mortgages to jump off the sidelines and into the market in June, particularly in larger, more expensive urban markets where affordability is strained, according to Gregory Klump, CREA’s chief economist.
‘“We have seen this happen before. If fixed mortgage rates continue holding where they are or edge slightly higher, sales may ebb over the summer and early autumn, with slightly higher borrowing costs picking up where the finance minister left off last year to keep the housing market in check,’ he explained.
Actual, not seasonally adjusted, activity came in 0.6% below levels reported in June 2012. When compared to year ago levels, the number of local markets was split evenly between those with year on year declines and those that posted gains in June. Greater Toronto and Montreal remain below year ago levels, although their declines continue to shrink. Meanwhile, sales in Greater Vancouver, Calgary, and Edmonton were up compared to last June.
Some 240,068 homes have traded hands across the country so far this year. That stands 6.9% below levels in the first half of 2012, when mortgage rules and guidelines had not yet been tightened. While the gap between sales this year and last year is expected to diminish, annual sales are still expected to fall short of last year’s total.
The number of newly listed homes edged down 0.5% month on month basis in June. New listings rose in a number of Canada’s most active markets including Greater Vancouver, Edmonton, Saskatoon, Winnipeg, Hamilton-Burlington, Oakville-Milton, and Quebec City. This was offset by a decline in new listings in a number of other large urban centres including the Fraser Valley, Calgary, Greater Toronto, London & St. Thomas, Montreal and Fredericton.
With sales activity up and new listings down, the national sales to new listings ratio rose to 53.8% in June from 51.8% in May, but remains firmly rooted in balanced market territory where it has been since early 2010. Based on a sales to new listings ratio of between 40 to 60% some two thirds of all local markets were in balanced market territory in June.
The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.
The number of months of inventory also indicates that Canada’s housing market remains balanced. There were 6.1 months of inventory at the end of June 2013, down slightly from 6.3 months at the end of May.
‘Just as declines in the national average price at this time last year reflected a drop in sales activity in some of Canada’s most expensive housing markets, much of the increase in the national average price in May and June can be attributed to recovering demand in those same markets, particularly Greater Vancouver,’ said Klump.
‘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 the average price is. The index shows year on year price growth stabilizing at a rate barely ahead of inflation,’ he pointed out.
The Aggregate Composite MLS® HPI rose 2.3% compared to June 2012. Year on year growth in the MLS® HPI had been slowing since late 2011, but has held steady near its current rate for four months.
This article was republished with permission from Property Wire.