Canada’s home sales slumped to the lowest level since 2012 last year after dropping for four straight months through December.
The 2.5 per cent December drop from the prior month was the most in eight months, the Canadian Real Estate Association (CREA) reports. Actual (not seasonally-adjusted) activity was down by 19 per cent from one year ago.
“What a difference a year makes,” says Barb Sukkau, CREA president. “Sales trends were pushed higher in December 2017 by homebuyers rushing to purchase before the new federal mortgage stress-test took effect at the beginning of 2018. Since then, the stress-test has weighed on sales to varying degrees in all Canadian housing markets and it will continue to do so this year.”
The actual national average price for homes sold in December 2018 was just over $472,000, down 4.9 per cent from the same month in 2017. The year-over-year decline reflects how the jump in sales in December 2017 in advance of the stress test was more pronounced in more expensive markets.
The national average price is heavily skewed by sales in the Greater Toronto Area and Greater Vancouver, two of Canada’s most active and expensive markets. Excluding those two markets from calculations cuts almost $100,000 from the national average price, trimming it to just under $375,000.
“The Bank of Canada recently said that it expects housing activity will stay ‘soft’ as households ‘adjust to the mortgage stress-test and increases in mortgage rates,’ even as jobs and incomes continue growing,” says Gregory Klump, CREA chief economist.