While activity declined in more than 70 per cent of local markets, the lower national figure resulted largely from fewer sales in Toronto, Vancouver and Ottawa. Actual (not seasonally adjusted) national sales activity was down 4.3 per cent in May from the same month last year.
In a departure from the normal seasonal pattern, national activity levels in May were also down from April levels. This suggests that the combination of changes to mortgage regulations and rising mortgage rates pulled forward a number of sales into April that would have otherwise taken place at a later date.
“May was the first full month in which sales activity was affected by these changes,” said CREA President Georges Pahud. “An accompanying decline in new listings and housing starts means these changes are also affecting the supply side, which will keep the market balanced and Canadian home prices stable.”
The seasonally adjusted number of homes that were new listings on Canadian MLS® Systems in May 2010 declined by four per cent from the previous month. This marks the first monthly decline in new listings in eight months. New listings had been climbing sharply, rising from a four-year low last September to the second highest level ever last month.
The number of homes listed for sale on Boards’ MLS® Systems at the end of May was up 5.4 per cent from levels at the same time last year, when the supply of homes for sale on the market had started declining. The national average price of homes sold via Canadian MLS® Systems rose 8.5 per cent in May from a year ago.
This is a smaller increase compared to those recorded over the past nine months. “Supply and demand has become more balanced in a number of major markets,” said CREA Chief Economist Gregory Klump. “Homebuyers now have more choice and are likely be in less of a rush to purchase than they were recently, so the amount of time it takes to sell a home is expected to rise in the coming months.”
With last year’s string of downwardly skewed average price values having now mostly passed, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price. The weighted average price compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. It climbed 8.4 per cent on a year-over-year basis in May 2010.
Similarly, the residential average price in Canada’s major markets was up 9.8 per cent year-over-year in May, while the weighted major market average price rose 10.7 per cent.
Statistics released by The Canadian Real Estate Association (CREA) show that the actual (not seasonally adjusted) number of months of inventory stood at 5.3 months in May 2010. This is up from 4.8 months at the same time last year. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.
On a seasonally adjusted basis, months of inventory stood at 6.1 months in May, the highest level since last April. “The number of months of inventory may rise further in response to easing sales activity and a further rise in the number of active listings,” said Klump. “However, the number of newly listed homes will ultimately retreat in response to a more competitive sales and pricing environment in a number of local markets. The outlook for the Canadian economy, employment, and mortgage market trends remain upbeat, so supply and demand will remain balanced on a national basis. Canada will avoid a U.S.-style home price correction.”PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information 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 neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types. MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale. The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 99,000 REALTORS® working through more than 100 real estate Boards and Associations.