Canadian home sales steady in August

National home sales were little changed in August (+0.3% m/m, seasonally adjusted). Following a strong spring surge in sales, activity has shown signs of stabilizing over the summer in many local markets, including in red-hot Toronto and Vancouver.

Market conditions overall remain fairly well balanced. The national average new-listings-to-sales ratio was unchanged at 1.76 last month, while the number of months of inventory held at 5.6. Both measures point to largely balanced conditions, though favouring sellers in some centres.

The national average house price edged up 0.7% m/m (+8.7% y/y) in August. The average continues to be skewed by strong sales and price gains in Canada's two most expensive markets - Greater Vancouver and Greater Toronto. Excluding these two markets, average prices were up 4.2% y/y.

Canada's housing market continues to show considerable resilience, supported by ultra-low interest rates and favourable homebuying demographics. National home sales over the first eight months of the year are up almost 6% from a year earlier, and on track to post the second best year on record (after 2007).

Local market conditions remain highly uneven, with relatively firmer labour markets supporting stronger housing demand and prices in Ontario and B.C., while deteriorating employment prospects have dragged on activity in Alberta and Saskatchewan. Even in the latter two provinces, however, pricing remains relatively stable.

"We expect the persistence of exceptionally low borrowing costs will sustain a relatively stable sales outlook for the fall, though there is a risk that increased economic uncertainty and market volatility could lead to a bigger slowdown in private sector hiring and household discretionary spending. Meanwhile, affordability is becoming more strained, particularly for single-family homes in Toronto and Vancouver", says Soctiabank.