Canadian home sales in September were down from August as some of the country’s hottest real estate markets saw sales cool, but prices continued to show strength.
The Canadian Real Estate Association said Thursday that home sales in September through its Multiple Listing Service were down 2.1% compared with August.
The drop came as the number of sales fell in more than half of the local markets tracked in September, led by declines in Vancouver, Calgary and Toronto.
Sales in Vancouver were down 3.8% for the month, while Toronto slipped 3.5%. Calgary dropped 7.5%.
Compared with a year ago, September sales for the country were up 0.7%.
BMO senior economist Sal Guatieri said the Canadian housing market is cooling somewhat. However, prices were “frothy” in the Vancouver and Toronto markets.
The national average price for a home sold in September was $433,649, up 6.1% from the same month a year ago. But, excluding the Vancouver and Toronto markets, the average was $334,705, up 2.9% from September last year.
“The story for the Greater Vancouver area and Greater Toronto area is that continued strong demand for a limited supply of detached properties is sending prices through the roof as international migrants, young millennials and an apparent influx of foreign wealth flock to these two areas,” Guatieri said.
“The latter could get a significant boost if China further eases foreign investment restrictions on individuals, as proposed later this year in the Qualified Domestic Individual Investor program.”
The Teranet—National Bank composite house price index for September was up 0.6% from August, the seventh consecutive month it has sat at an all-time high.
Prices were up for the month in six of the 11 metropolitan markets surveyed, including Halifax, Vancouver, Hamilton, Victoria, Calgary and Toronto. Prices in Edmonton were flat, while prices fell in Quebec City, Winnipeg, Ottawa-Gatineau and Montreal.
Compared with a year ago, the index was up 5.6%, its largest 12-month advance since May 2012.
The Canadian housing market has been helped by continued low interest rates that lower the overall cost of buying a house, creating fears among some of a housing bubble that could burst if rates rise significantly.
TD Bank economist Diana Petramala said the latest sales results for September are consistent with a continued hot housing market, but noted it doesn’t appear to be getting any hotter.
“This underscores our view that the highly stimulative impact of lower mortgage rates at the start of this year would wear out by September/October,” she said.
“Looking forward, a favourable economic backdrop and balanced market conditions will continue to support a moderate pace of housing activity in most markets across Canada.
However, the downturn in the oilpatch continued to take its toll.
Sales in Calgary were down 34.2% compared with a year ago, while sales Edmonton were down 8.2% from last year. Regina was down 17.9% from September 2014 and Saskatoon was off 20.1%.
The number of newly listed homes slipped 2.1% from August to September, while the national sales-to-new listings ratio was 56.8% in September.
CREA says a sales-to-new listings ratio between 40 and 60% is generally consistent with a balanced market.
The number of months of inventory of homes for sale was 5.7 months at the end of September, up slightly from the 5.6 months where it has been for the previous four months.