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In its monthly report, the Canadian Real Estate Association (CREA) said existing home sales fell by 0.1 per cent in November over October, but were up 5.9 per cent year-over-year.
November was the second consecutive month in which sales slowed after a pick-up in market activity in the late summer and early fall. CREA chalked up the increase in activity during that time to homebuyers with pre-approved mortgages jumping into the market before the pre-approvals expired.
CREA went on to predict that total home sales in 2014 would be higher than 2013, as the weak start that the market experienced in 2013 would not recur next year.
Canada’s banks wasted no time in publishing their own takes on CREA’s November report.
In a short report titled “Silent Night… For The Hard Landing Crowd,” Bank of Montreal Chief Economist Douglas Porter agreed with CREA’s assessment that sales activity rose earlier in the year due to buyers rushing in to beat higher mortgage rates.
“Still, the bigger picture is how well national sales held up in 2013 amid a torrent of calls for calamity in Canada’s housing market,” wrote Porter.
“In contrast to dime-a-dozen doomsday forecasts at the start of 2013, sales for the full year are now on track for a tiny gain, with the first 11 months showing a 0.2 per cent rise from year-ago levels.”
Porter went on to identify the country’s hottest markets in 2013 as Calgary, Edmonton and “against all expectations” Vancouver.
Writing for TD Economics, Senior Economist Sonya Gulati said that Canada’s existing home market “continues to stand on firm legs.”
“While we would not describe the housing market as the comeback kid just yet, the market is certainly showing us its reluctance to fade to the background,” she wrote.
Gulati also said that TD Economics believes the housing market is in for a soft landing and that reduced affordability as a result of higher mortgage rates “will prevent the housing market from taking off over the next few years.”
RBC Chief Economist Robert Hogue disagreed with CREA’s prediction that there would be 475,000 home sales in 2014. Hogue’s forecast is 454,000 units sold which is slightly higher than RBC’s own estimate for 2013.
New condo units in Canada’s large markets were singled out in RBC’s commentary with Hogue writing that they will pose a risk next year. However, the units are being mostly absorbed and “are unlikely to have a destabilizing effect in the short term.”
“We expect that the combination of flattening demand later next year and strong supply of newly completed condo units will rein in price increases in 2014.”