Home sales in Canada slipped in August by nearly 10%, according to a report Friday, putting the nation on track for a 5.3% decline for the year. Canadian Real Estate Association said in the report that the actual sales in August, not seasonally adjusted, were down 9.9% year to year. Sales in nearly two-thirds of all local markets declined, led by the Greater Toronto Area and nearby housing markets.
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However, the average price for a home sold in August was C$472,247 (US$387,071), up 3.6% compared to a year ago, which is heavily skewed by sales in Greater Vancouver and Greater Toronto area.
Excluding these two most expensive markets from calculations, the national average price would be down to C$373,859 (US$306,429).
The Bank of Canada announced on Sept. 6 that it would further raise its overnight lending rate from 0.75% to 1%.
"Experience shows that home buyers watch mortgage rates carefully and that recent interest rate increases will prompt some to make an offer before rates move higher, while moving others to the sidelines," said association president, Andrew Peck, in the report.
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Resales of Canadian homes rose 1.3% in August from July, breaking a string of four straight monthly declines, as Toronto sales bounced back after dramatic cooling during the spring.
"Time will tell whether the monthly rise in August sales activity marks the beginning of a rebound, particularly in the Greater Golden Horseshoe region and other higher-priced urban centers," said Gregory Klump, the association’s Chief Economist in the report."The picture will become clearer once mortgages that were pre-approved prior to recent interest rate hikes expire."
Home sales in Canada increased 6.5% to 534,709 units in 2016, according to CREA.
The association projects national home sales in Canada will decline by 5.3% year-over-year in 2017, and that there will be 20,000 fewer sales than previously forecast in June. The decline is almost entirely a result of the lower forecast of home sales in Ontario, it said.
The association expects that sales in British Columbia and Ontario would fall about 10% in 2017, compared to record highs set in 2016.