Real estate transactions in Canada continued to fall in July with a drop in sales in British Columbia and Ontario particularly noticeable, according to the latest figures to be published.
A slowdown in these two provinces pulled national sales figures down, says the report from the Canadian Real Estate Association.
Seasonally adjusted national home sales activity via the Multiple Listing Service (MLS) fell 6.8% in July. But in British Columbia sales fell 14.1% and Ontario they were down 8%, accounting for 85% of the change in national activity in July.
Actual, not seasonally adjusted, national sales activity was 30% lower in July 2010 compared to last year’s record July. But year on year transactions are still up 5.6% compared to the first seven months of last year, although this gap is expected to continue to shrink as the year progresses since activity rose sharply over the second half of last year, reaching levels that are unlikely to be matched in the final five months of 2010.
New supply continues to adjust to the lower demand, according to the report. The seasonally adjusted number of new residential listings on Canadian MLS Systems declined by 7.2% in July 2010 compared to the previous month. This is the third consecutive month on month decrease and the steepest in more than a decade. Since reaching their most recent peak in April, new listings have fallen 17.5%.
The declining trend in new listings will help maintain the balance between supply and demand and temper home price volatility, CREA says. The national sales to new listings ratio, a measure of market balance, has held steady between 48 and 49% for the past three months, which is characteristic of a balanced market.
The average price of properties in July was $330,351, edging up 1% from the same month last year. While year on year comparisons have been shrinking as prices stabilize, the national average home price is likely to be somewhat understated this month, since the majority of activity declines occurred in British Columbia and Ontario, which include many of Canada’s most expensive markets.
The same phenomenon is widely known to have caused much of the downward skewing in the national average price during the recession. This is most evident when looking at a breakdown of average prices by province. Average home prices eased slightly in Nova Scotia and Prince Edward Island in July, but gains in every other province exceeded the national increase.
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 seven months at the end of July 2010 on a national basis. This is up from 4.4 months one year ago, which was one of the lowest levels in the past three years.
The seasonally adjusted number of months of inventory stood at 7.3 months at the end of July on a national basis. This is the highest level since March 2009, but the pace of monthly gains is slowing as new listings continue to adjust to lower demand.
‘The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year. Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals,’ said CREA President Georges Pahud.
‘While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region,’ he added.