Photo: Robert Jack 啸风 Will/Flickr

Toronto saw a surge of newly listed homes in September, raising the national average after a slow summer.

“There was a big round of listings in April, when [Ontario’s Fair Housing Plan] was announced, but there was not a lot of activity through the summer, because many people were holding back to see when prices would stabilize,” BMO Senior Economist Robert Kavcic tells BuzzBuzzNews. “Now we’re seeing listings bounce back.”

According to the Canadian Real Estate Association’s (CREA) latest data release, the number of newly listed homes nationwide grew by five per cent, led by a Toronto increase of 19 per cent.

“I think there’s evidence that listings will remain pretty solid heading into the fall,” says Kavcic.

The increase in listings comes hand-in-hand with a nationwide increase in home sales. Year-over-year, national sales rose 2.1 per cent nationally in September, the second month of increases after a summer of declines.

The national average price of a home was up 2.8 per cent year-over-year, while the MLS Home Price Index (HPI) slowed for a fifth straight month, at 10.7 per cent year-over-year.

Vancouver home prices soared 17.2 per cent in September, while sales rose 6.1 per cent over the previous month and 25 per cent year-over-year.

“The GVA…is once again showing signs of heating conditions, with sales up strongly and prices nearing record levels,” writes TD Senior Economist Michael Dolega, in a statement. “Still, we expect rising mortgage rates will take some steam out of the market given the affordability pressures, with slower price growth on the horizon.”

That horizon includes the Office of the Superintendent of Financial Institutions’ (OSFI) plans to introduce a stress test for all uninsured mortgages by the end of the year.

The anticipated move by the government financial regulator — which could require home buyers applying for an uninsured mortgage to qualify against a rate that is at least 2 per cent higher than what they are signing up for — could slash Canadian home prices.

Gregory Klump, CREA’s Chief Economist, says that the move could jeopardize Canada’s economic growth.

“Further tightening of federal regulations aimed at cooling housing markets in Toronto and Vancouver risks creating collateral damage in markets elsewhere in Canada,” writes Klump, in a statement. “It also jeopardizes Canadian economic growth, which is already showing signs of fading.”

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The impact of future changes to mortgage rules aside, September saw the national housing market balance out, with the country-wide sales-to-new-listings ratio now sitting at 55.7 per cent, compared to 57.2 per cent in August.

According to CREA, a ratio of between 40 and 60 per cent is considered generally consistent with a balanced national housing market.

Whether the market continues to balance out will depend in part on when the Bank of Canada decides to raise its overnight rate next.

While opinions vary on when the next hike will come — TD Economics is predicting one in December — Kavcic says he believes the Bank will wait until the new year, allowing time for the market to balance further.

“How balanced the market becomes depends on what the [Bank of Canada] does,” says Kavcic. “Our thinking is they’ll take the rest of the year off when it comes to rate hikes. If they wait to increase rates, the way the economy is rolling, I think that’s the environment where the market balances out.”

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