Residential property sales in Canada fell by 1.7% in November compared with the previous month at a time when mortgage lending tightened, according to the latest data from the Canadian Real Estate Association (CREA). The actual, not seasonally adjusted, national average price for homes sold in November 2012 was $356,687, a fall of 0.8% from November 2011.
CREA said that the national average price continues to be influenced by compositional factors, most notably fewer sales in Greater Vancouver and Greater Toronto. Excluding these two markets from the national average price calculation shows a year on year increase of 3.2% which reflects year on year average sale price increases in two thirds of all local markets in November 2012.
Year on year growth remained strongest for one storey single family home prices which were up 4.9% and two storey single family homes up 4.2% with prices for townhouse and apartments showing more modest gains, rising 1.8% and 1.3% respectively. The data shows that national home sales activity has been running about 8% below levels in the first half of the year since new lending rules came into the system in August.#
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While down on a national basis, activity picked up in roughly two of every five local markets in November including Vancouver Island, Victoria, Chilliwack, Kitchener-Waterloo, and Guelph. Greater Toronto, Greater Montreal, and Greater Vancouver contributed most to the small decline at the national level although actual, not seasonally adjusted, activity came in 11.9% below November 2011 levels.
Sales were down on a year on year basis in three of every four of all local markets in November, including most large urban centres although Calgary stood out as an exception, with activity up 10.6% from a year ago. ‘National sales activity has remained fairly steady at lower levels since mortgage rules were changed earlier this year, but that stability masks some real differences in trends among local housing markets,’ explained CREA president Wayne Moen.
However, it is clear that national sales activity lacks the momentum it had a year ago, according to Gregory Klump, CREA’s chief economist. ‘Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity,’ he said.
A total of 432,861 homes sold in the Canadian MLS® Systems so far this year, down 0.2% from levels reported over the first 11 months of 2011, and 0.8% below the 10 year average for the period. The number of newly listed homes fell 0.9% month on month in November with Greater Vancouver posting the largest decline, with new supply there having fallen to its lowest level in more than two years. As sales and new listings move in the same direction and by similar magnitudes, the national sales to new listings ratio was little changed at 50.3% in November compared to 50.7% in October. Based on a sales to new listings ratio of between 40 to 60%, three out of every five local markets were in balanced market territory in November.
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, and it too was little changed in November. Nationally, there were 6.6 months of inventory at the end of November 2012 compared to 6.5 months at the end of October.