Followers of Toronto real estate might have been surprised when they saw the numbers from the latest Teranet-National Bank House Price Index this morning.

According to the index, home prices in Metro Toronto were up a record 3.7 per cent in June, compared to May — even amid widespread reports of a cooldown following Ontario’s April announcement of its Fair Housing Plan.

But an economist from National Bank suggests the index’s month-over-month increase for June might not be all that it seems.

“Look at the fact that the Teranet-National Bank data comes from a land registry, and so transactions are recorded in the land registry about one or two months after the sale is recorded in the (multiple-listing-service) system,” National Bank Economist Marc Pinsonneault tells BuzzBuzzNews.

Note: MLS systems are used by real estate boards across the country to track market data such as pricing, purchases and new listings.

Pinsonneault continues, “When you have a sudden shift in price trends, it’s plausible that the Teranet-National Bank index will be lagged with the MLS [Home Price Index].”

Recent trends in Toronto home sales and listings are suggestive of a cooling off period for pricing, the National Bank economist acknowledges.

In June, 7,974 homes changed hands across the Greater Toronto Area, down from the 10,166 transactions recorded through the Toronto Real Estate Board (TREB)’s MLS system in May.

At the same time, new listings have flooded the market, a total of 19,614 appearing in June, up 15.9 per cent from a year earlier.

And in May, the first full month after Premier Kathleen Wynne’s provincial government announced the Fair Housing Plan, which includes a foreign-buyer tax for the GTA and surrounding region, 25,837 new listings hit the market.

That’s up 48.9 per cent compared to listing activity on the resale market in May 2016.

“If we haven’t seen it (price declines) yet in the Teranet-National Bank index, it could be a question of a delay due to the sort of data,” Pinsonneault says, again touching on the fact that sales take longer to be reported through land registry offices.

Pinsonneault agrees that July could show the first signs of monthly price drops.

Compared to the same time last year, the Teranet-National Bank House Price Index indicated Metro Toronto home prices were up 29.3 per cent in June, the greatest annual increase for the city in that month on record.

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