For the first time in nearly half a year, home sales activity across Canada declined, in large part due to the weaker performances of the Toronto and Vancouver markets.
In its latest data release, the Canadian Real Estate Association reported a 0.4% month-over-month sales shrinkage in September, the first such decline since April this year.
This echoed the larger annual trend. Compared to September 2017, last month’s sales decreased by 8.9%.
Toronto’s sales numbers went down by 0.5% month-over-month with a 0.1% increase in the benchmark price, while Vancouver experienced a more pronounced 1.5% drop along with a 1.2% decrease in prices.
Nationwide, the average sale price of a home as of September stood at a little under $487,000, up 0.2% year-over-year.
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These numbers all point to the Canadian housing market’s more “moderate pace” in the near future, TD Economics stated.
“[The CREA report] is consistent with our forecast calling for resale activity to rise at a more moderate pace in coming quarters, as increasing borrowing costs and stretched affordability conditions in key markets keep a lid on demand,” bank economist Rishi Sondhi wrote in a note, as quoted by The Canadian Press.
Many Canadian markets are expected to “become even more restrictive” in the next few months as interest rate hikes and tighter mortgage regulations will continue to exert significant pressure nationwide, according to CREA president Barb Sukkau.
“In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price,” CREA chief economist Gregory Klump added.
“However, in places where buyers are keen to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price. It will be interesting to see how supply and demand respond to rising interest rates amid this year’s new mortgage stress-test.”