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Canadian Home Sales Hit Five-Year Low on Tougher Mortgage Rules

16 May 2018

CREA's latest statistics, released today, show decreasing national home sales and prices between March and April.

In April home sales fell by 2.9% to their lowest level in the past 5 years. That figure has fallen by 11.3 per cent from April 2017.

The realtor group said the number of sales plunged by 13.9 per cent compared to the previous year's level, and fell to their lowest April showing since 2011.

Those numbers were much higher than those experienced in Newfoundland and Labrador, Saint John, Sherbrooke, Saguenay, Quebec, Gatineau and Windsor-Essex markets, where the average home price in April hovered between $200,000 and $300,000.

When compared to April of past year, actual (not seasonally adjusted) activity was down 13.9%.

"This year's new stress test has lowered sales activity and destabilized market balance for housing markets in Alberta, Saskatchewan and Newfoundland", CREA economist Gregory Klump wrote in the report.

Adrienne Warren, senior economist at Scotiabank, said in a note that "the combination of tightening financial conditions and additional policy measures" seem to have cooled down Canada's previously hot housing market. The Canadian real estate market held 5.6 months of inventory on a national basis at the end of April 2018.

Home sales fell 21 per cent in Calgary in April compared to the same month previous year, and were down 1.6 per cent in Edmonton, 8.1 per cent in Regina, 56 per cent in Saint John, and 20 per cent in Newfoundland and Labrador.

Townhouses and row units saw the second highest gain at 6.5%.

CREA also said the country has experienced a decrease in the non-seasonally adjusted national average sale price, which dropped by 11.3% year-over-year last month to just over $495,000. Excluding those two markets from the calculations would drop the national average by $109,000, to just under $386,100.

CREA said April sales were also down significantly in markets around Toronto, but have been down over the past year following a market correction that began last May, so it is hard to assess how much of the decline is due to the impact of the stress test rules.

Canadian Home Sales Hit Five-Year Low on Tougher Mortgage Rules