The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS® Systems) of Canadian real estate Boards and Associations in 2013 and 2014.
Most Canadian housing markets have been evolving as anticipated since CREA's last forecast released in March. National sales activity has held fairly stable since it moderated last August in the wake of changes to mortgage lending rules and guidelines.
Although sales in the first quarter of 2013 remained virtually on par with those in the fourth quarter of 2012, the monthly sales trend improved toward the end of the first quarter and accelerated in the second quarter.
National sales activity is now forecast to reach 443,400 units in 2013. This represents a decline of 2.5 per cent from 454,573 sales in 2012, and marks an upward revision from the previous forecast decline of 2.9 per cent. Alberta and Prince Edward Island are the only provinces where sales are projected to post an annual increase in 2013, with declines in other provinces reflecting the impact of more restrictive mortgage lending rules and guidelines.
"All real estate markets are local, with prospects that differ by region and community," said Laura Leyser, CREA President. "For that reason, buyers and sellers should talk to their REALTOR® about the housing market outlook where they live or would like to live."
CREA has also revised its forecast for national activity in 2014 to 464,300 units, representing a rebound of 4.7 per cent and reflecting a slow but steady improvement in activity. This still leaves national activity one-tenth of a percentage point below its 10-year-average, with activity remaining below levels recorded in the first half of 2012.
British Columbia is still forecast to see the strongest sales increase in 2014 (+9.9%) compared to a weak result in 2013. Most other provinces are forecast to post gains in the range between two and six per cent, reflecting moderate economic, job, population, and income growth and low mortgage interest rates.
In contrast to sales, average prices have held firmer than expected. The national average home price is now forecast to rise by 2.1 per cent to $370,900 in 2013.
The forecast increase reflects a compositional shift in the average price calculation. Steep declines in sales activity in Greater Vancouver and Greater Toronto during the second half of 2012 weighed heavily on average prices in British Columbia, Ontario and nationally at that time. Since then, their share of national sales activity has improved and their weight in the national average price calculation has risen. Ontario, British Columbia and national average prices are likely to rise above year-ago levels during the second half of 2013 as a result.
The upward revision to the average price forecast also reflects stronger than previously expected price growth this spring in other housing markets across the country. Average price gains in 2013 are projected to be strongest in Alberta, Saskatchewan, as well as Newfoundland and Labrador, with annual increases of between four and five per cent. At 3.6 per cent, average price growth in Manitoba is also forecast to exceed the national result.
The national average price forecast for 2014 has also been revised upward to $377,700 in 2014, an annual increase of 1.8 per cent. As in 2013, part of the increase reflects an expected increase in the share of total sales among relatively more expensive provincial housing markets and a further increase in their weight in the national average price calculation.
At 3.4 per cent, Alberta is forecast to post the biggest average price increase in 2014, with gains in Newfoundland and Labrador, Saskatchewan and Manitoba running just ahead of inflation. Average prices in Quebec and New Brunswick are expected to be largely flat in 2014, with other provinces posting gains in the range from 0.5 to 1.5 per cent.
"Canadians remain confident about the value of home ownership," said Gregory Klump, CREA's Chief Economist. "Job market trends and low interest rates remain supportive for Canada's housing sector, so we remain upbeat about prospects for sales and average prices this year and next."