Canada’s existing home sales fall in April, but remains quite elevated

Canada’s existing home sales dropped in April from earlier month’s record level. The sales fell 1.7 percent; however, it continues to remain quite elevated. The bigger mover was a 10 percent rise in listings in the month that assisted in bringing down the sales-to-listings ratio to 60.1 from 67.3 in the earlier month. The tightness in the market alleviated significantly last month, but the Canadian market as a whole continues to be in seller’s territory, although marginally, noted TD Economics.

Given that market conditions continue to be relatively tight, the average sales price rose 10.6 percent year-on-year and the quality adjusted MLS rose sharply by 19.8 percent. Home prices rose sharply for all types of housing, with price growth ranging from 21.8 percent year-on-year for single-detached homes to 18.8 percent year-on-year for apartments.

The fall in sales was mainly due to markets throughout southern Ontario and Quebec, while most other markets recorded a modest rise. Existing home sales in Greater Vancouver Area are beginning to shrug off the effects of 2016’s alterations to provincial and federal housing policy; however, remain still well off last year’s peak levels, stated TD Economics.

The largest rise in listings was also recorded in GTA that aided in bringing the sales-to-listings ratio in the balanced territory. But, home price growth stayed pretty sticky, with the GTA posting the hottest price growth throughout the nation. But most other markets in southern Ontario and mainland BC stayed the tightest throughout the nation.

In the coming few months, the real estate markets are expected to take a breather due to policy and tax changes; however, these effects might be temporary. Markets in British Columbia are expected to be the first to trend higher as they were the first to record a slowdown. But the impact of the basket of policy measures executed at the federal and provincial levels starts to wear off, higher interest rates might ultimately aid in keeping market activity from running away from underlying economic fundamentals again, said TD Economics.

“Our forecast calls for a 120 basis point increase in the 5-year government bond yield by the end of 2018, with most of this likely passed into higher mortgage rates. Overall, we expect that housing policy changes have kick-started a soft landing, while higher mortgage should help solidify it”, added TD Economics.