Existing home sales in nearly two-thirds of all local Canadian housing markets were down month-over-month in December according to the latest report from the Canadian Real Estate Association (CREA).
National home sales declined 5.8 per cent from November to December, the largest monthly decline since 2010. Calgary and Edmonton saw the largest drops in activity, each recording about a 25 per cent dive in sales, while activity in the Greater Toronto Area saw a more modest drop, with sales down by about five per cent from November.
However, when compared to activity during the same period the previous year, national home sales logged a 7.9 per cent increase in December 2014.
“December sales were down from the previous month in a number of Canada’s largest and most active housing markets, indicating a broadly based cooling off for Canadian home sales as 2014 came to an end,” said Gregory Klump, CREA’s Chief Economist, in a press release. “Even so, sales remain above year-ago levels in many of the same markets.”
Indeed, two-thirds of all local markets saw sales increases over the previous year, with Greater Vancouver and the Fraser Valley, Greater Toronto and Montreal leading the way.
Klump went on to explain that uncertainty over oil prices softened consumer confidence and drove homebuyers to the sidelines in Alberta’s biggest cities, accounting for the large month-over-month decline. He also pointed out that sales activity in the province’s major markets had been strong all year before returning to “levels that are entirely average for the month of December.”
“The slump in oil prices is likely to trigger a housing downturn in commodity-driven markets, like Calgary and Edmonton — markets that were once expected to be among the strongest.”
Turning to home prices, CREA said that the average price for a home sold in Canada in December 2014 was $405,233, up 3.8 per cent over the previous year. Excluding Greater Vancouver and Greater Toronto — the country’s most active and most expensive markets — the report said that the national average sale price came in at a more modest $319,481, up 1.9 per cent year-over-year.
The MLS House Price Index, which CREA describes as a better gauge for price trends, increased by 5.38 per cent year-over-year in December. Unsurprisingly, the “hot three” housing markets — Calgary, Greater Toronto and Greater Vancouver — saw the biggest gains with Calgary ahead of the pack, recording an 8.8 per cent increase over December 2013.
Not all markets tracked by the index saw large increases. Saskatoon, Ottawa and Greater Montreal saw increases of less than one per cent while prices in Regina were down 3.48 per cent.
Reacting to the new CREA numbers, TD Bank economist Diana Petramala wrote that December sets the stage for a moderation in Canadian housing activity to begin in 2015.
“The slump in oil prices is likely to trigger a housing downturn in commodity-driven markets, like Calgary and Edmonton — markets that were once expected to be among the strongest,” she wrote.
“A continued low interest rate environment may result in a pick-up in housing activity in non-commodity drive markets next year. However, already elevated home prices may limit activity in key markets like Toronto and Vancouver.”