Dramatic numbers from the Canadian Real Estate Association (CREA) suggest that the Canadian housing market is seeing a boost after last summer’s new mortgage rules. However, despite the the 9.4 per cent boost in sales and 8.4 per cent rise in prices in July (year-over-year), the association suggests that overall, the market is flattening out.
The MLS Home Price Index (HPI) rose 2.7 per cent year-over-year in July, a number much less impressive than the 8.4 per cent price bump. And between June and July, the country saw a 0.2 per cent increase in sales.
“Canadian home sales have staged a bit of a recovery in recent months after having declined in the wake of tightened mortgage rules and lending guidelines last year, but the numbers for July suggest that national activity is levelling off at what might best be described as average levels,” said Gregory Klump, CREA’s Chief Economist, in the news release.
“Sales dropped sharply in August last year, so we may see some year-over-year increases in sales and average prices next month that would reflect weakness in the rear view mirror.”
The figures were mixed on a city-to-city basis, with bigger markets helping push the average price in Canada to $382,373.
“If Greater Toronto and Greater Vancouver are removed from national average price calculations, the increase is cut almost by half. A better gauge of what’s going on with prices is the MLS Home Price Index, which is not affected by changes in the mix of sales the way that the average price is. The index shows year-over-year price growth stabilizing between two and three per cent,” Klump explained.
The national sales-to-new listings ratio was 54 per cent, in line with June’s reading of 53.7 per cent. Based on a sales-to-new listings ratio of between 40 to 60 per cent, two-thirds of all local markets were in balanced market territory last month.
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