National resale housing activity rebounded slightly in Canada in September 2012, marking the first monthly increase since the spring, according to the latest statistics from the Canadian Real Estate Association (CREA).
The number of home sales processed rose 2.5% month on month, the first monthly gain in activity since March 2012 and a partial recovery from the 6.2% drop recorded in August in the wake of new mortgage rules.
Activity picked up in about 60% of local markets in September, including Greater Vancouver, Calgary, Edmonton, Greater Toronto, and Quebec City. Calgary and Quebec City were the only two large markets where new listings eased in September, with declines of less than 2%.
Actual, not seasonally adjusted, activity however, remained down 15.1 % from the same time last year with more than half of all local markets posting declines of at least 10%.
‘New mortgage rules continue to keep a lid on national sales activity. That said, national figures mask diverging trends in different markets, with activity down in some places while sales elsewhere remain strong,’ said CREA President Wayne Moen.
Indeed, national activity is likely to remain down from year ago levels over the fourth quarter of 2012, according to Gregory Klump, CREA’s chief economist.
‘In the shadow of the latest mortgage rule changes, activity has ratcheted down from higher levels seen during the fourth quarter last year. While some first time home buyers may no longer qualify for mortgage financing under the new rules, it is likely that many others are stepping back and reassessing how much house they can realistically afford, which is one of the things new mortgage rules were designed to do,’ he explained.
National sales reached 110,376 units in the third quarter of 2012, down 6.5% from the previous quarter. A total of 366,353 homes have traded hands so far this year, up 1% from levels reported over the first nine months of 2011.
With the increase in new listings outstripping the increase in sales activity, the national housing market became further entrenched within balanced market territory in September.
The national sales to new listings ratio, a measure of market balance, stood at 49% in September 2012, remaining near the midpoint of a balanced market. Based on a sales to new listings ratio of between 40 to 60%, a little less than two thirds of all local markets were in balanced market territory in September.
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 sell current inventories at the current rate of sales activity. The small monthly rise in national sales activity resulted in a decline in the months of inventory to 6.4 months at the end of September compared to 6.6 months at the end of August. Months of inventory readings declined from the previous month in more than half of all local markets.
The actual, not seasonally adjusted, national average price for homes sold in September 2012 was $355,777, up 1.1% from the same month last year.
The national average price continues to be influenced by compositional factors, most notably by fewer sales in Greater Vancouver this year compared to much stronger levels last year. The result has been a downwardly skewed national average price this year compared to an upwardly skewed average selling price last year.
Excluding Greater Vancouver, which currently accounts for less than 5%, of national activity, from the national average price calculation yields a year on year increase of 3.4%, reflecting average sale prices that rose in 70% of all local markets in September 2012.