John Morrissy
Sun
The Canadian housing market is cooling, but the decline will be moderate, thanks to the rebound in the labour market, economists say.
Canadian home sales fell 2.6 per cent in April from the previous month, with residential sales totalling 52,042 units last month, 6.8 per cent below the peak reached in December 2009, the Canadian Real Estate Association said Monday.
Listings, meanwhile, rose to 99,901 homes newly being put up for sale, a record for the month of April that suggests balance is returning to what had been a sellers’ market.
On a seasonally adjusted basis, the months of housing inventory available rose to 5.3 months, the highest level since last May.
“Canada’s housing market has gone from full gallop to stately canter and is poised to slow to a leisurely trot in the months ahead,” said Bank of Montreal deputy chief economist Douglas Porter. “The tote board of higher rates, tighter mortgage rules and the HST will rein in activity. However, the solid rebound in Canada’s job market is an important supportive factor, keeping the market from fully breaking stride.”
As for prices, the average national home price rose 12.2 per cent in April from the same month last year, although that is the mildest gain in eight months.
Prices might punch higher in the months ahead but are expected to cool considerably in the second half, Porter said, refusing to rule out the possibility prices would actually decline.
Higher borrowing costs and home prices will “eat away at the once-buoyant demand for housing,” despite a strong domestic economic backdrop and a labour market that has added 285,000 jobs since the recession eased in July 2009, said TD Securities senior strategist Millan Mulraine.
On a year-over-year basis, home sales were up 20.3 per cent in April. But the trend there also seems to be slowing, especially when comparing the April figures with the 70 per cent-plus sales gains of last year, Porter pointed out.
Regionally, residential sales and new listings declined in Saskatchewan, Ontario, Quebec, Newfoundland and New Brunswick, with sales down in Nova Scotia but listings up, Scotia Capital economist Derek Holt said in a morning note.
Alberta, Manitoba, B.C. and P.E.I., on the other hand, witnessed an increase in sales in April.
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