On Monday, the Canadian Real Estate Association cut its sales forecast for this year and next as it reported slower sales for November in the wake of tighter lending rules that came into effect in the summer.
The industry association says national home sales in 2012 are expected to drop to 456,300, a 0.5 per cent decline from 2011’s 458,412.
CREA also now expects sales in 2013 to drop two per cent to 447,400. Earlier it had predicted a 1.9 per cent drop to 457,800 for next year.
“Annual sales in 2012 reflect a stronger profile prior to recent mortgage rule changes followed by weaker activity following their implementation,” stated CREA chief economist Gregory Klump in a release.
“By contrast, forecast sales in 2013 reflect an improvement from levels this summer in the immediate wake of mortgage rule changes. Even so, sales in most provinces next year are expected to remain down from levels posted prior to the most recent changes to mortgage regulations,” said Klump.
From 2011 to 2012, Alberta is still expected to post the biggest annual increase, up 13.1 per cent, which will offset most of the projected 10.7 per cent decline in British Columbia.
Despite the small downward revisions to the forecast for national sales in 2012 and 2013, activity is still expected to remain within reach of the 10-year average, CREA says.
The national average home price is projected to rise by 0.3 per cent to $363,900 in 2012, with gains in excess of that in most provinces. The smaller gain in average price nationally as compared to most provinces largely reflects a decline in sales activity among more expensive housing markets compared to 2011, particularly in BC and more recently in Ontario.
The national average price is forecast to edge up another three tenths of one per cent to $365,100 in 2013, with British Columbia, Ontario, and New Brunswick registering small price declines and modest price gains in line with or below inflation in other provinces.
The downgrade for 2012’s outlook came as home sales dropped 1.7 per cent month-over-month in November, back to where they stood in August. The decrease followed a drop of about one-tenth of a per cent in September.
However, activity picked up in roughly two of every five local markets in November, including Vancouver Island, Victoria, Chilliwack, Kitchener-Waterloo, and Guelph. Greater Toronto, Greater Montreal, and Greater Vancouver contributed most to the small decline at the national level.
Actual (not seasonally adjusted) activity came in 11.9 per cent below November 2011 levels. Sales were down on a year-over-year basis in three of every four of all local markets in November, including most large urban centres. Calgary stood out as an exception, with activity up 10.6 per cent from a year ago.
A total of 432,861 homes have traded hands over Canadian MLS Systems so far this year, down 0.2 per cent from levels reported over the first eleven months of 2011, and 0.8 per cent below the 10 year average for the period.
Unlike average price, the MLS Home Price Index is not affected by changes in the mix of sales, so it provides the best gauge of Canadian home price trends, CREA says. The MLS Home Price Index rose 3.5 per cent nationally on a year-over-year basis in November.