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Existing home sales declined in the first quarter of 2008 compared to the previous quarter while new listings reached their highest level on record, according to MLS® statistics released by The Canadian Real Estate Association (CREA). This made the resale housing market more balanced compared to any other quarter over the past nine years.
Seasonally adjusted MLS® sales activity in Canada’s major markets declined 7.1 per cent to 81,747 units in the first quarter of 2008 compared to the fourth highest level on record in the previous quarter. The decline in activity largely reflected fewer sales in Toronto in February and March. Sales activity in Toronto accounts for about one-quarter of all existing home sales in major markets in Canada.
Activity also softened in Vancouver and Calgary but remained very strong in other markets. New quarterly records for seasonally adjusted sales activity were set in Regina and Saskatoon. Quarterly transactions also reached their second highest ever levels in Newfoundland & Labrador, and Thunder Bay.
In March 2008, a total of 26,799 homes traded hands via MLS® on a seasonally adjusted basis, up 0.9 per cent from the three-year low recorded in February. On a year-to-year comparison, MLS® sales activity in March was also below the record sales levels set in the same month last year.
Seasonally adjusted new MLS® residential listings climbed 4.8 per cent quarter-over-quarter to 154,217 units in the first quarter of 2008 – the highest quarterly level ever recorded.
New listings surged in Calgary, Edmonton and Vancouver in the first quarter compared to the fourth quarter last year. Higher listings in those markets more than offset a quarterly decline in newly listed properties in Toronto.
The quarterly jump in new MLS® listings and decline in sales activity made the resale housing market more balanced in the first quarter of 2008 than during any other quarter in the past nine years. Nearly every major market in Canada became more balanced. Edmonton and Calgary remain the most balanced major markets. Negotiations most heavily favor sellers in Regina, Saskatoon and Winnipeg where existing home markets are the tightest.
The major market MLS® residential average price climbed 5.5 per cent year-over-year to $327,620 in the first quarter. This is the smallest year-over-year price increase since the fourth quarter of 2001, and again reflects a more balanced housing market.
In March, the MLS® residential average price increased four per cent year-over-year to $329,383. New records for average price were set in a number of major markets in March, including Saskatoon, Winnipeg, Hamiliton-Burlington, Ottawa and Halifax.
“The residential average price continues to increase, unlike conditions in many U.S. markets,” said CREA President Cal Lindberg. “The size of the increase is returning to what we consider more normal levels for most markets in Canada, reflecting a sound but cooling market for existing homes. We are past the days of constantly setting MLS® records.”
“Sales activity in a number of major markets trended lower while listings swelled in the first quarter,” said CREA Chief Economist Gregory Klump. “Many major markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue, as rising mortgage carrying costs and property taxes erode affordability,” he added.
“The credit crunch has had limited impact on Canadian mortgage lending to date. Resale housing activity will continue to be supported by rising after-tax incomes, high employment, upbeat consumer sentiment and declining interest rates,” said Klump. (CREA 17/04/08)
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