Fewer homes sold last month than Jan. 2012

Average price up 2%

OTTAWA – The number of homes sold in Canada last month was down 5.2 per cent from January 2012, although about half of the country’s local markets saw an improvement from December, the Canadian Real Estate Association said Friday.

The January national average sales price compiled by the industry group was $354,754, up two per cent from a year earlier.

A composite price index, which CREA says is a better measure because it takes into account changes in the types of property sold, rose 3.1 per cent — the smallest increase since April 2011.

TD economist Derek Burleton said prices have been supported by “contained” supply, with the number of new listings last month about the same as in January 2012 and up modestly from December.

“The number of months of inventory at the end of January stood at a moderate 6.6, down slightly from 6.7 in December,” Burleton wrote in a note.

He said there’s “reasonably balanced market conditions, both overall and across most major metropolitan centres.”

CREA said sales in the ultra-expensive Vancouver area were down year-to-year, skewing the national averages. Excluding Vancouver from the mix, CREA’s national average price would have been up 3.3 per cent.

Vancouver and Toronto were among the local markets that saw improved sales activity last month, compared with December.

In the Greater Toronto area, there was a month-to-month increase of 5.6 per cent and in the Greater Vancouver area the increase was 4.7 per cent. On a national basis, the increase between December and January was 1.3 per cent.

Among the markets with softer sales were Ottawa, the Fraser Valley in B.C.’s Lower Mainland, Montreal, Regina, London and St. Thomas in southwestern Ontario and Calgary.

New listings were up 1.6 per cent month-to-month nationally with Toronto, Vancouver, Montreal, the Fraser Valley and Vancouver Island showing increases.

CREA noted that house sales in the second half of 2012 felt the impact of tighter mortgage rules brought in last summer — a move that many observers have said discouraged first-time buyers by making it harder for them to get mortgages.

“Year-over-year declines in activity have received attention lately, and understandably so since they’re more exciting compared to the fairly steady month-over-month trend for national sales following changes made last year to mortgage regulations and lending guidelines,” CREA chief economist Gregory Klump said in a statement.

“If national sales activity remains stable near the levels we’ve been seeing since last August, then year-over-year comparisons will begin fading after the crucial spring buying season.”

Robert Kavcic, a senior economist at BMO Capital Markets, said “the decline in home prices in recent months has been entirely consistent with the soft patches seen after prior episodes of mortgage rule tightening, and January’s results point in the direction of stabilizing sales and prices for most markets.”

“The spring selling season will be key in determining if prices again find a floor, and with still-low mortgage rates, a four-year low jobless rate and surging equity markets, don’t be shocked if they do, at least in the vast majority of markets.”