Canadian home sales in December were down for the fourth month in a row, capping the weakest annual sales since 2012, the Canadian Real Estate Association said Tuesday.
The association said home sales fell 2.5 per cent on a month-over-month basis in December, reaching 36,759 on a seasonally adjusted basis. Compared with December 2017, home sales in the final month of 2018 were down 19 per cent.
CREA president Barb Sukkau attributed the drop to a rush of buyers at the end of 2017 ahead of tighter mortgage rules that came into force on Jan. 1, 2018.
“The stress-test has weighed on sales to varying degrees in all Canadian housing markets and will continue to do so this year,” she said in a statement.
CREA said December home sales were down from a year ago in three-quarters of all local markets, led by B.C.’s Lower Mainland, the Okanagan, Calgary, Edmonton, the Greater Toronto Area and Hamilton-Burlington.
December data shows transactions dropped in about 60 per cent of all local markets compared to November, with Vancouver Island among the leaders of lower activity.
Year-over-year in December, CREA says the benchmark price for a home went up 6.4 per cent in Victoria to $686,000.
The increase is 11 per cent for the rest of Vancouver Island, from a benchmark price of $436,500 in December 2017 to $484,500 last month.
CREA said the national average price for homes sold in December was down 4.9 per cent year-over-year, reaching $472,000.
Excluding Greater Vancouver and the Greater Toronto Area, two of Canada’s most active and expensive markets, the average sale price was just under $375,000.
BMO Capital Markets senior economist Robert Kavcic took the drop in sales and prices to be signs that the market has softened and “the headline-grabbing drama in recent years has largely run its course.”
“It’s probably not a stretch to think that the Canadian housing market has entered into a prolonged period of relative stagnation, where sales are roughly flat and prices no longer outrun inflation,” he wrote in a note to clients.
“This would be a big change compared to conditions we’ve experienced over the past decade, especially in Toronto and Vancouver, but it’s not at all uncommon when looking back through history and across different markets.”
Vancouver, he pointed out, finished the year at the lowest seasonally adjusted level since the Great Recession, leaving buyers in control.
In the Greater Toronto Area, he said, he expected prices to keep up with inflation, but figures it will be a “long while” before March 2017 price levels are seen again.
Kavcic anticipated home sales will struggle to stabilize in Calgary, Edmonton and Regina, but Atlantic markets would see a flattening out over time.
Montreal and Ottawa, he said, are likely “best positioned to keep churning out real home price gains” in 2019.
Looking ahead, TD Bank economist Rishi Sondhi predicted declines seen in December will weigh on residential investment and overall economic growth across all markets.
“Our forecast calls for Canadian sales to basically tread water after 2018’s plunge, as the impact of rising borrowing costs and tighter lending conditions are countered by strong population gains and on-going job growth,” Sondhi said in a note to investors.
“Still, the level of sales will remain relatively low compared to recent years.”
Files from the Canadian Press.