Canada’s existing home sales rise for first time in five months in August

Canada’s existing home sales rose in August for the first time in five months. Existing home sales were up 1.3 percent sequentially. Still, existing home sales continued to be 13.8 percent below the peak reached in March 2017. The rise was mainly due to a rebound in GTA activity, which rose 13.6 percent in August, with several Ontario markets also seeing a rebound. Other markets that recorded recovery were Vancouver, Halifax and Saint John as well as both Regina and Saskatoon. Meanwhile, Winnipeg, Montreal, Victoria and many Ontario markets outside of the Greater Toronto Area saw activity drop. Activity in Calgary and Edmonton was largely flat, noted TD Economics in a research report.

New listings dropped further by 3.8 percent on the month, marking a third straight decline. The rise in sales and drop in listings has pushed the sales-to-new listings ratio higher to 0.57 from 0.54, and near the top end of the 0.4 to 0.6 range considered a balanced market. New listings in Toronto have dropped back for the fourth straight month, and are down to 28 percent from their recent peak. GTA listings rose after the imposition of the Fair Housing Plan in April, but are now back down to their lowest level since February, stated TD Economics.

Due to the pullback in listings and rebounding sales activity, Toronto’s market has recovered, going from ultra-tight in January to amongst the weakest in Canada in May-July period to fairly balanced in August. Tighter activity was seen in Vancouver too, with sales to listings rising from 0.63 in July to 0.68 in August.

The average home prices were up 0.7 percent as activity shifted towards the more expensive GTA and GVA markets. Transaction prices greatly stabilized in GAT but dropped in the GVA. The quality adjusted MLS home price index dropped 0.8 percent on the month.

The GTA market is expected to continue along its path of a weak landing, with additional gains in sales activity expected and prices likely to start to turn positive in the months ahead, said TD Economics.

Meanwhile, conditions are also tightening up in the GVA, where prices and activity are advancing at a good clip. Still, prices are unlikely to begin to runaway given the existing affordability restrictions in the area which should act as a drag on home price inflation going forward, particularly amidst rising interest rates.

“After raising rates twice in the past two months, the Bank of Canada is expected to hike once again later this year, with another hike or two likely next year”, added TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -134.202, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -7.20981. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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