Property listings and sales falling in Canada
The number of newly listed properties and real estate sales in general are falling in Canada, according to the latest figures to be published.
Seasonally adjusted sales activity decreased by 8.2% in June from the previous month, the data from the Canadian Real Estate Association (CREA) shows. The decline was led by lower activity in Toronto and Calgary, but sales fell in almost 70% of local markets.
Tightened mortgage regulations and anticipated interest rateincreases cooled sales activity throughout the second quarter, resulting in a decline of 13.3% from near record levels in the first quarter. As expected, these two national factors contributed to a widespread decline in activity, with transactions down in all but a dozen or so smaller markets.
Actual national sales activity was 19.7% lower in June 2010 compared to last year when activity almost reached a new record for the month. Actual sales activity in the second quarter stood 2.8% below levels reported in the second quarter of 2009.
Year on year transactions are up 13.6% compared to the first six months of last year. This gap is expected to shrink as the year progresses, since activity trended upward over the second half of last year and is forecast to continue easing over the second half of 2010, according to CREA.
The number of newly listed homes on Canadian MLS® Systems in June 2010 declined by 6.8% from the previous month, following a monthly decline of 4.8% in May. A declining trend in new listings will help maintain the balance between supply and demand, and temper home price volatility, the organisation pointed out.
The national average price of homes sold via Canadian MLS® Systems rose 4.9% on a year on year basis in June to $342,662. But the CREA report points out that the national average price can be skewed by changes in provincial sales activity. The national weighted average price compensates for this by taking into account provincial proportions of privately owned housing stock. It climbed 6.3% year on year in June 2010.
Similarly, the residential average price in Canada’s major markets was up 5.7% year on year in June, while the weighted major market average price rose 8.7%.
The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and measures the balance between housing supply and demand. It stood at 5.7 months at the end of June 2010 on a national basis. This is up from 4.2 months a year ago, when it fell to its lowest level since the economic recovery began. The rise in the number of months of inventory was widespread, with increases from year ago levels in all provinces, except Manitoba and Prince Edward Island.
The seasonally adjusted number of months of inventory stood at 6.9 months at the end of June on a national basis, the highest level since March 2009. It may rise further as sales activity trends lower over the second half of 2010, but an expected decline in the number of new listings should stabilize the balance between supply and demand.
‘The housing market is becoming more challenging for sellers. Buyers are in less of a hurry, so sellers should consult with their local agent on how to best price and present their home to attract purchase offers,’ said CREA President Georges Pahud.
National property sales activity is easing due to fewer and more cautious first time home buyers, according to chief economist Gregory Klump. ‘With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010. While the pricing environment is becoming more challenging, a recovering economy and job market will provide support for housing activity and prices,’ he said.