Canadian existing home sales fall in January, near-time volatility likely to persist in market

Existing home sales dropped in Canada in January. On a sequential basis, existing home sales fell 14.5 percent, putting a stop to the five consecutive rises and erasing all the gains seen during the time. Out of twenty-six main markets, only five saw rises, with the group consisting of Newfoundland & Labrador, Saguenay, Gatineau, Sudbury and Regina.

New listings fell an even greater 21.6 percent nationally. Ontario and B.C. markets led the pullback with London, Fraser Valley and GVA topping the list. Just four markets saw a rise in listings, mostly markets that have also seen a rise in sales.

The outsized fall in listings resulted in a tightening of market conditions, with the sales to listings ratio rising 5.3 points to 63.6 percent nationally. Most acute tightening was seen in many GGH markets. The ratio rose sharply in Kitchener-Waterloo and London.

The average home price fell 2.4 percent sequentially, buckling the five-month trend. It was a mixed bag throughout markets, half the provinces seeing declines. Prices dropped 1.6 percent in Ontario and B.C. with values 4.2 percent lower in the GVA, while GTA prices were a bit softer, down 0.9 percent.

The decline in price was mainly because of the change in composition of properties sold, with GTA and GVA sales contributing just 23.4 percent to the national sales, down from 25.8 percent in the earlier month. The national HPI rose 0.5 percent on a seasonally adjusted basis, with gains of 1.1 percent and 0.4 percent for GVA and GTA. On a year-on-year basis, the national index slowed to 7.7 percent. The trend was mirrored by the GTA HPI, which decelerated to 5.3 percent from 7.3 percent, while the GVA HPI accelerated to 16.8 percent.

“We expect some near-term volatility to persist in the market, as the fallout from the new rules and rising rates is absorbed by buyers and sellers, before some stabilization by mid-year. Thereafter we expect activity to remain weighed down by rising interest rates, but with markets largely in balanced territory prices should remain well supported”, stated TD Economics in a research report.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -109.975, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -171.889. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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