OTTAWA – Canadian home sales heated up in June to their best pace since March 2010 after a sluggish start to the year due to the frigid winter and late spring.
The Canadian Real Estate Association said Tuesday that sales through its Multiple Listings Service in June were up 0.8 per cent from May as sales were up in about half of the markets tracked last month with the Vancouver region and Montreal leading the way.
Compared with a year ago, sales were 11.2 per cent higher led by Vancouver, the Fraser Valley, Calgary, Toronto and Hamilton-Burlington.
The national average sale price was up 6.9 per cent from June 2013 at $413,215.
“At least some of the recent burst in new supply reflects the slow start to the year, when a harsh winter caused many sellers to delay listing their home in many parts of the country,” CREA chief economist Gregory Klump said in a statement.
“In markets with tight supply and strong demand, the strength of sales in recent months reflects how many properties were snapped up once they finally hit the market. Because the impact of deferred listings and sales has likely run its course, activity over the second half of the year may not be able to maintain the kind of pace we’ve seen over the past couple of months.”
CREA said the national sales-to-new listings ratio was 53.6 per cent in June, up slightly from 53.2 per cent in May, but still within the range for a balanced market.
Bank of Montreal senior economist Robert Kavcic noted that sales through the first six months of the year were up 4.2 per cent compared with a year ago.
“Canada’s housing market continues to look balanced overall, with stark disparities persisting at the regional level,” Kavcic wrote in a note to clients.
“That said, it is a tad concerning that prices are running firmly ahead of income growth in a few major cities. Calgary is understandable and Vancouver is shaking off a mild correction, but Toronto might be getting too hot for its own good.”
The health of the Canadian housing market has been scrutinized and debated. The majority of economists believe the market is headed for a soft landing after years of robust growth, however some have raised concerns about a steeper drop.
On Monday, Fitch Ratings said the Canadian home market is as much as 20 per cent overpriced and cautioned Ottawa may need to do more to slow down borrowing on homes.
The concerns by Fitch followed a report by the Morningstar research firm that suggested a 30 per cent correction was possible over the next few years.
TD Bank economist Diana Petramala noted Tuesday that existing home prices are on track to outstrip income growth for a second straight year in 2014, adding to concerns of an overpriced market.
“Looking beyond the near-term boost from low interest rates, we are still of the view that the Canadian housing market will cool later this year and into 2015.
“For one, interest rates are not expected to remain this low for much longer with economic conditions forecast to pick up. Affordability, even at low interest rates, is already becoming an obstacle in many markets — particularly Toronto.”