Average shrinkage in home sales nationwide far lower than anticipated
In its latest report on national home sales numbers as of May, the Canadian Real Estate Association pointed at a 1.6% month-over-month increase in Toronto residential transactions – a development that analysts said was the “first sign of stability” in the long overheated market
“For policy makers, that’s exactly what they are looking for, that the bottom isn’t falling out for housing,” BMO Capital Markets Canadian rates and macro strategist Benjamin Reitzes told Bloomberg.
Defying earlier predictions by economists which pegged sales declines of an average of 1.1% month-over-month, transactions shrunk by merely 0.1% in May, which according to CREA is near the lowest levels in 5 years.
Read more: Current price correction in Ontario not similar to previous bust periods – CMHC
CREA noted that this moderation might be indicative of would-be home buyers’ gradual adjustment towards the stricter regulatory regime and recent interest rate hikes. Data showed that sales numbers increased in almost half of all markets nationwide.
“The stress-test that came into effect this year for home buyers with more than a 20% down payment is continuing to suppress sales activity,” CREA president Barb Sukkau wrote in the report.
Despite these makings of a positive market trend, however, the Association is still projecting an 11% year-over-year decline in 2018 sales, shaving the number of nationwide transactions down to 459,500.
