CREA: House Sales Falling Month-After-Month

This year started off at a hot pace for Canadian home sales, especially in Toronto and Vancouver. However, the Canadian Real Estate Association CREA reported that sales in the country’s hottest housing markets are expected to drop in the second half of 2016. There’s also a shortage of housing expected in Toronto, Vancouver as well as B.C

On Wednesday, the group said “Activity should begin to rebalance away from B.C. and Ontario as supply shortages put upward pressure on home prices and constrain transactions even as housing demand remains strong in these provinces and interest rates remain low.”

“Accordingly, sales activity over the second half of the year is expected to ease in B.C., Ontario and on a national basis.” says CREA.

After a long and in-depth survey, the association was able to provide a full-year forecast for home sales due to the strong start of 2016. In the survey, it reported that home sales are expected to increase by 6.1%, as 536,400 homes are expected to be sold. Compared to its recent survey conducted in March 2016, the record is going for an increase of 1% making it 511,500.

The record also indicated that sales within the MLS system have dropped by 2.8% month-over-month in May. Around the same time last year, sales increased by 9.6% maintaining a 15.1% increase above the 10-year average for the month.

Diana Petramala, a TD Bank economist, claimed that despite the sales drop in May, Ontario and B.C are still expected to bounce back during the spring selling season.

“In fact, May’s decline looks more like a supply story rather than a demand story, with not enough homes on the market to fulfill what appears to be insatiable demand,” she said.

In May, the amount of newly listed homes dropped by 3.2%.

National sales of new listings ratio also increased to 64.8% in May as well and was also the highest reading since October 2009.

The association reported that a ration between 40% and 60% is generally consistent with a balanced market.

In May, the average price for houses was up to 13.2% compared to last year.

Apart from Toronto and Vancouver, the average price for houses sold in May was estimated to be $375,532, which was a 9% increase compared to last year. Excluding B.C and Ontario, the average price of houses sold in May dropped by 0.7% compared to last year.

The banks of Canada issued a warning that house prices in hot housing markets such as Toronto and Vancouver were skyrocketing at an unsustanable pace and are urging municipalities to take immediate action.