Canadian home sales rise again in May 2019

Canadian Real Estate Association
June 14, 2019
By Canadian Real Estate Association
June 14, 2019 - Home sales recorded via Canadian MLS Systems rose by 1.9 per cent in May 2019.

Together with monthly gains in March and April, activity in May reached the highest level since January 2018. While sales stood 8.9 per cent above the six-year low reached in February 2019, this latest increase has only just returned levels to their historical average.

While May sales were only up in half of all local markets, that list included almost all large markets, led by gains in both the Greater Vancouver (GVA) and Greater Toronto (GTA) areas.

Actual (not seasonally adjusted) sales activity was up 6.7 per cent compared to May 2018, marking the largest y-o-y gain recorded since the summer of 2016. The increase returned sales in line with the 10-year average for the month of May. While about two-thirds of local markets posted y-o-y gains for the month, the national increase was dominated by improving sales trends in the GTA, which accounted for close to half of the overall increase.

"Home price trends and market balance continues to differ significantly among Canadian housing markets," said Jason Stephen, CREA's president. "All real estate is local. No matter where you are, a professional realtor is your best source for information and guidance in negotiations to purchase or sell a home during these changing times," said Stephen.

"The mortgage stress-test continues to present challenges for home buyers in housing markets where they have plenty of homes to choose from but are forced by the test to save up a bigger down payment," said Gregory Klump, CREA's chief economist. "Hopefully the stress-test can be fine-tuned to enable home buyers to qualify for mortgage financing sooner without causing prices to shoot up."

The number of newly listed homes edged back by 1.2 per cent in May. With sales up and new listings down, the national sales-to-new listings ratio tightened to 57.4 per cent in May compared to 55.7 per cent in April. That said, the measure is still within close reach of its long-term average of 53.5 per cent.

Considering the degree and duration to which market balance readings are above or below their long-term averages is the best way of gauging whether local housing market conditions favour buyers or sellers. Market balance measures that are within one standard deviation of their long-term average are generally consistent with balanced market conditions.

Based on a comparison of the sales-to-new listings ratio with the long-term average, almost three-quarters of all local markets were in balanced market territory in May 2019.

The number of months of inventory is another important measure of the balance between sales and the supply of listings. It represents how long it would take to liquidate current inventories at the current rate of sales activity.

There were 5.1 months of inventory on a national basis at the end of May 2019, down from 5.3 in April and 5.6 months back in February. Like the sales-to-new listings ratio, the number of months of inventory is within close reach its long-term average of 5.3 months.

Housing market balance varies significantly by region. The number of months of inventory has swollen far beyond long-term averages in prairie provinces and Newfoundland and Labrador, giving homebuyers in those parts of the country ample choice. By contrast, the measure remains well below long-term averages for Ontario and Maritime provinces, resulting in increased competition among buyers for listings and fertile ground for price gains.

MLS HPI data are now available on a seasonally adjusted basis in addition to the actual (not seasonally adjusted) figures. On a seasonally adjusted basis, the Aggregate Composite MLS HPI edged down 0.2 per cent in May 2019 compared to April and stood 1.4 per cent below the peak reached in December 2018.

Seasonally adjusted MLS HPI readings in May were up from the previous month in 12 of the 18 markets tracked by the index; however, home price declines in the Lower Mainland of British Columbia contributed to the monthly decline in the overall index.

Markets where prices rose in May from the month before include Victoria (0.5 per cent), Edmonton (0.2 per cent), Saskatoon (0.4 per cent), Ottawa (0.7 per cent), Niagara (0.2 per cent), Oakville (0.8 per cent), Guelph (0.5 per cent), Barrie (3.6 per cent), Montreal (0.5 per cent) and Greater Moncton (0.5 per cent), with gains of 0.1 per cent in the GTA and Regina.

By contrast, readings were down from the month before in the GVA (-1.0 per cent), Fraser Valley (-1.1 per cent) the Okanagan Valley (-1.3 per cent) Calgary (-0.1 per cent) and Hamilton (-0.7 per cent), while holding steady on Vancouver Island outside Victoria.

The actual (not seasonally adjusted) Aggregate Composite MLS Home Price Index (MLS HPI) edged down by -0.6 per cent y-o-y in May 2019. While small, it was nonetheless the largest decline in almost a decade.

All benchmark property categories tracked by the index posted y-o-y declines in May 2019.

Townhouse/row and apartment unit prices were little changed from last May, edging back by just 0.2 per cent. By comparison, two-storey single-family home prices were down 0.5% y-o-y and one-storey single-family home prices fell 1.7 per cent y-o-y.

Trends continue to vary widely among the 18 housing markets tracked by the MLS HPI. Results remain mixed in British Columbia, with prices down on a y-o-y basis in the GVA (-8.9 per cent), the Fraser Valley (-5.9 per cent) and the Okanagan Valley (-0.7 per cent). Meanwhile, prices edged up 1 per cent in Victoria and climbed 4.7 per cent elsewhere on Vancouver Island.
Among Greater Golden Horseshoe housing markets tracked by the index, MLS HPI benchmark home prices were up from year-ago levels in Guelph (+5.7 per cent), the Niagara Region (+5.4 per cent), Hamilton-Burlington (+3.4 per cent), Oakville-Milton (+3.4 per cent) and the GTA (+3.1 per cent). By contrast, home prices in Barrie and District held below year-ago levels (-6.1).

Across the Prairies, supply remains historically elevated relative to sales and home prices remain below year-ago levels. Benchmark prices were down by 4.3 per cent in Calgary, 3.6 per cent in Edmonton, 3.9 per cent in Regina and 1.3 per cent in Saskatoon. The home pricing environment will likely remain weak in these cities until demand and supply return to better balance.

Home prices rose 8 per cent y-o-y in Ottawa (led by a 12.2 per cent increase in townhouse/row unit prices), 6.3 per cent in Greater Montreal (led by a 7.6 per cent increase in apartment unit prices), and 2 per cent in Greater Moncton (led by a 15.9 per cent increase in apartment unit prices).

The MLS HPI provides the best way to gauge price trends, as averages are strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in May 2019 was close to $508,000, up 1.8 per cent from the same month in 2018.

The national average price is heavily skewed by sales in the GVA and GTA, two of Canada's most active and expensive housing markets. Excluding these two markets from calculations cuts almost $111,000 from the national average price, trimming it to just under $397,000.

Note: The information contained in this news release combines both major market and national sales information from MLS Systems from the previous month. CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas.

Statistical information contained in this report includes all housing types.
MLS Systems are co-operative marketing systems used only by Canada's real estate Boards to ensure maximum exposure of properties listed for sale.

Highlights:

• National home sales rose 1.9 per cent month-over-month (m-o-m) in May.
• Actual (not seasonally adjusted) activity was up 6.7 per cent year-over-year (y-o-y).
• The number of newly listed homes edged back by 1.2 per cent m-o-m.
• The MLS Home Price Index (HPI) fell 0.2 per cent m-o-m in May, the fifth straight decline.
• The actual (not seasonally adjusted) MLS HPI stood 0.6 per cent below May 2018.
• The actual (not seasonally adjusted) national average sale price was up 1.8 per cent y-o-y.

For more information visit, www.crea.ca.


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