National residential sales decline sharply in January

In its latest data release, the Canadian Real Estate Association (CREA) revealed that home sales on a nationwide basis fell significantly in January 2018.

National residential sales declined by 14.5% from December 2017 to January 2018, with actual (not seasonally adjusted) activity decreasing 2.4% year-over-year last month.

January activity was down in 75% of all local markets in Canada, including all major urban centres, CREA reported.

“Many of the larger declines in percentage terms were posted in Greater Golden Horseshoe (GGH) markets, where sales had picked up late last year following the announcement of tighter mortgage rules coming into effect in January.”

However, while activity retreated to the lowest monthly level in 3 years, January sales remained on par with the 10-year monthly average.

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Actual (not seasonally adjusted) activity was down 2.4% from January 2017 and stood close the 10-year average for the month of January. Sales came in below year-ago levels in about half of all local markets, led by those in the GGH region. By contrast, sales were up on a y-o-y basis in the Lower Mainland of British Columbia and Vancouver Island, the Okanagan Region, Edmonton, Montreal, Greater Moncton, and Halifax-Dartmouth.

“The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion,” CREA president Andrew Peck said. “At the same time, the changes do nothing to address government concerns about home prices that stem from an ongoing supply shortage in major markets like Vancouver and Toronto. Unless these supply shortages are addressed, concerns will persist.”

“The decline in January sales provides clear evidence that the strength in activity late last year reflected a pull-forward of transactions, as rational homebuyers hurried to purchase before mortgage rules changed in 2018,” CREA chief economist Gregory Klump added. “At the same time, a large decline in new listings prevented market balance from shifting in favour of homebuyers.”