According to statistics released today by The Canadian Real Estate Association (CREA), national home sales edged upward on a month-over-month basis in March 2013 but stayed well below levels recorded one year ago.
The number of home sales processed through the MLS® Systems of real estate Boards and Associations and other co-operative listing systems in Canada rose 2.4 per cent on a month-over-month basis in March 2013.
Home sales improved in more than half of all local markets from February to March, led by gains in Greater Vancouver, Fraser Valley, Calgary, Greater Toronto, Montreal, Saskatoon, Hamilton-Burlington, and Kitchener-Waterloo.
“National sales have been holding fairly stable since last summer,” said CREA President Laura Leyser. “We’ll be watching closely as the spring market picks up to see whether the March sales increase marks the beginning of an improving trend. In the meantime, it’s important to remember that local market conditions often can and do differ from what’s reported at the national level, so buyers and sellers really should speak to their REALTOR® to understand how the housing market is shaping up where they live or might like to.”
Sales in March were constrained by the Easter holiday and an extra full weekend at the end of the month, the latter of which is known as a “trading day effect,” and both of which generally result in sales being held back. Seasonal adjustment strips out normal seasonal fluctuations and trading day effects that otherwise affect the data. It puts data on an equal footing so that data for any two months can be meaningfully compared to each other and to underlying economic fundamentals.
“Easter and trading day factors combined effectively to cut March sales short,” said Gregory Klump, CREA’s Chief Economist. “Activity in the months ahead will reveal whether the monthly improvement in seasonally adjusted March sales reflects technical seasonal adjustment factors or a fundamental improvement in demand.”
“That said, the factors that crimped March sales this year were not in play for the same month last year, resulting in speculation that the gap between sales activity this March and March of last year would be bigger than it was in February. That the gap in fact improved marginally speaks to the resilience of housing demand in Canada,” Klump said.
Actual (not seasonally adjusted) activity came in 15.3 per cent below levels reported in March 2012, compared to a year-over-year decline in February sales of 15.9 per cent. Although transactions remained down from year ago levels in more than 90 per cent of all local markets, the gap diminished in a number of large urban markets including Greater Vancouver, Calgary, Regina, Saskatoon, Montreal, and Quebec City. As was the case in February, Edmonton was the only large urban market in which monthly sales surpassed year-ago levels.
“Analysis will likely continue to focus on how sales remain down from last year, but this shouldn’t come as a surprise given that mortgage regulations and lending guidelines at that time were yet to be tightened,” said Klump. “Since those factors came into force, national home sales have held fairly steady, notwithstanding the rise in seasonally adjusted March sales.”
The number of newly listed homes rose 3.2 per cent month-over-month in March. New listings were up in about two thirds of all local markets, led by Greater Toronto, Montreal, London and St. Thomas, and Calgary.
With sales and new listings having climbed in tandem, the national sales-to-new listings ratio was little changed at 49.9 per cent in March compared to 50.3 per cent in February. This measure has held fairly steady around this level for the past eight months. Based on a sales-to-new listings ratio of between 40 to 60 per cent, slightly over 60 per cent of all local markets were in balanced market territory in March.
The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity, and it too was little changed in March.
Nationally, there were 6.5 months of inventory at the end of March 2013. This was down from 6.7 months reported at the end of February, resulting from the increase in sales combined with a third consecutive decline in the overall supply of homes for sale. “The number of months of inventory remains elevated but stable in the wake of recent changes to mortgage rules and lending guidelines,” said Klump.
The actual (not seasonally adjusted) national average price for homes sold in March 2013 was $378,532, representing an increase of 2.5 per cent from the same month last year.
Fewer sales compared to year-ago levels in Greater Vancouver and Greater Toronto continue exerting a gravitational pull on the national average sale price, but price gains in Calgary and Edmonton are increasingly putting upward pressure on the national average.
As evidence of this, excluding Greater Vancouver and Greater Toronto from the national average price calculation yields a year-over-year increase of 4.3 per cent, while only excluding Calgary and Edmonton yields a year-over-year increase of just 1.9 per cent.
The MLS® Home Price Index (MLS® HPI) is not affected by changes in the mix of sales the way that average price is. For that reason, it provides the best gauge of Canadian home price trends.
The Aggregate Composite MLS® HPI rose 2.2 per cent on a year-over-year basis in March. This marks the eleventh time in as many months that the year-over-year gain shrank and the slowest rate of increase in more than two years.
Year-over-year price gains decelerated for all Benchmark property types tracked by the index. Price growth remained strongest for one-storey single family homes (+3.4 per cent), followed by two-storey single family homes (+2.5 per cent), townhouse/row units (+2.1 per cent), and apartment units (+0.4 per cent).
Year-over-year price growth in the aggregate MLS® HPI for all Benchmark property types combined also slowed in all markets tracked by the index.
The MLS® HPI again rose fastest in Calgary (+7.7 per cent), followed by Regina (+4.2 per cent), Greater Toronto (+2.9 per cent), Greater Montreal (+2.0 per cent), and the Fraser Valley (+0.1 per cent). In Greater Vancouver, the MLS® HPI slipped further into negative territory, posting a 3.9 per cent year-over-year decline in March.