Home resales across Canada last month were down slightly from September, continuing a mild housing market slowdown in the face of mortgage reforms, a weakening economy, high consumer debt and elevated property prices.
The Canadian Real Estate Association reported Thursday that 13,004 residential properties were sold in October through the industry-run Multiple Listing Service, down about 0.1 per cent from September on a seasonally-adjusted basis.
The national average home price through MLS was also virtually unchanged from October of last year at $361,516, an increase of just $80.
However, the number of new listings across Canada fell by 3.8 per cent to 71,735 in October from 74,618 in September, keeping the market balanced in terms of supply and demand — at least nationally.
“While Canada’s market continues to look balanced overall, there are clear pockets of strength and weakness,” BMO Capital economist Robert Kavcic observes in his analysis of the CREA results.
The BMO report described Vancouver, Victoria, Regina and Saskatoon as buyers’ markets — where supply markedly outstrips demand and dampens asking prices — and Winnipeg, Saint John, N.B. and the Ontario cities of Hamilton-Burlington, St. Catharines, Sudbury, Thunder Bay and Windsor as sellers’ markets.
Despite the typical variation of local market conditions, Kavcic concluded that the national scene is “quite balanced” and “it looks at this point like the elusive soft landing is taking shape.”
CREA said sales transactions in October were up compared with levels one year ago in almost two-thirds of all local markets, with Calgary leading the advances. Sales were below October 2011 levels in Toronto, Vancouver and Montreal.
CREA says there are signs of diverging trends among local housing markets, with Alberta and Saskatchewan gaining strength and other traditionally hot areas cooling.
“Little has changed since national activity geared down in the wake of mortgage rules that came into force in July,” said Gregory Klump, CREA’s chief economist.
“Opinions differ about how sharply sales have slowed depending on the local housing market.”
There have been concerns raised by a wide range of observers including Finance Minister Jim Flaherty that certain local markets and certain types of housing — particularly condos — had become overpriced and at risk of a collapse.
Flaherty moved in July to tighten mortgage rules for the fourth time in as many years in order to discourage those most at risk of becoming over-leveraged.
The record high levels of consumer debt among Canadians has raised another red flag from Bank of Canada governor Mark Carney and others who have warned that interest rates will rise at some point — raising the cost of borrowing.
However, so far, there have been only localized price declines in some places while year-to-year price increases have generally continued — although at a slower rate of growth.
A housing price index compiled by CREA showed its smallest year-to-year gain since May 2011, rising 3.6 per cent from a year earlier to 156.4 in October.
The HPI is a benchmark that measures fluctuations over time, with prices in January 2005 equal to 100.
Regina had the biggest year-to-year gain in HPI, with Calgary, Toronto, Montreal and the Fraser Valley region of British Columbia also showing increases. Vancouver’s HPI eased by 0.8 per cent to 158.3.
The national index was down 0.13 percentage point in October compared with September. Six of the seven localized indexes compiled by CREA were also down from September while Calgary was unchanged.
A RBC Economics analysis by Robert Hogue said the September and October statistics suggest the recent cooling in market activity may have run its course.
“Going forward, we believe that the forces acting on the market will apply both upward and downward pressure, with the net effect being largely neutral,” Hogue wrote.
“Accordingly, we expect home resales to remain mostly stable in the period ahead. The moderation in home prices, however, is likely to continue in the near term, reflecting greater choices now available to buyers.”