Sales of existing homes climbed 0.6% in April from March, but year-over-year sales were down 3.1%, the Canadian Real Estate Association said on yesterday in a report that showed a small spring bounce in an otherwise slowing housing sector.
CREA’s home price index rose 2.2% in April from a year earlier, its smallest gain in more than two years. That echoed the 2.0% April gain in the Teranet-National Bank Composite House Price Index reported on Tuesday.
Prices, still above year-ago levels in most markets, typically lag a slowdown in sales activity as sellers resist pressure to lower asking prices and wait to see whether the market is truly declining.
Canada’s housing market began slowing in the middle of 2012, when the government tightened lending rules in a bid to prevent consumers from taking on too much debt.
“Today’s report further underscores our argument that tighter mortgage regulations have a transitory impact and the expectation for stabilization in the housing market. We expect this theme will persist over the balance of the year and into 2014,” Mazen Issa, Canada Macro Strategist at TD Securities, said in a research note.
He said the key markets of Toronto and Vancouver look more balanced after a period of moderation, which will help limit the downside in prices.
The April month-on-month uptick in sales was the second straight monthly gain. CREA said home sales improved in more than half of all local markets in April from March, led by gains in Toronto, Winnipeg, Calgary and Victoria.
There was some noise in the data. CREA chief economist Gregory Klump said the Easter holiday and extra full weekend in March lowered sales activity that month and boosted April sales.
The CREA report showed the national sales-to-new listings ratio inched up to 50.4% in April from 49.7% in March. It has held near the same level for the past nine months.
Nationally, there were 6.6 months of inventory at the end of April 2013, unchanged from the end of March.
The national average price, not seasonally adjusted, for homes sold in April was $380,588, up 1.3% from the same month last year.
Source: Andrea Hopkins, Reuters