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Summer Housing Market in Canada Continues to Cool

Sales down for the fourth month in a row

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July saw home sales dip 2.1% nationwide in comparison to June.

Onest Mistic / Getty Images
July saw home sales dip 2.1% nationwide in comparison to June.
Onest Mistic / Getty Images

Home resales in Canada dropped for the fourth straight month in July.

July saw home sales dip 2.1% nationwide in comparison to June, according to a report released Tuesday by The Canadian Real Estate Association. That figure was 15.3% below the record sales activity set in March.

Last month’s decline though, wasn’t as drastic as in May (6.4%) and June (6.1%), a factor that association president Andrew Peck suggested in the report could be a result of an interest rate hike in July that may have helped boost sales by motivating buyers with pre-approved mortgages to make an offer.

More:Foreigners Account for 5.8% of Property Transactions in Vancouver

For Ontario, Canada’s highest- populated province, it could be a sign that its new housing rules―which include a 15% foreign buyers' tax--are beginning to settle down.

"July marked the smallest monthly decline in Greater Golden Horseshoe home sales since Ontario’s Fair Housing Plan was announced in April," said Gregory Klump, the association’s chief economist. The Greater Golden Horseshoe area refers to a region of Southern Ontario along the coast of Lake Ontario, encompassing the Greater Toronto Area. "This suggests sales may be starting to bottom out amid stabilizing housing market sentiment. Time will tell whether that’s indeed the case once the transitory boost by buyers with pre-approved mortgages fades."

A wider comparison shows that actual sales, not seasonally adjusted, were down 11.9% from July 2016. Home prices meanwhile, were up 12.9% from last year, according to the MLS Home Price Index.

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The number of newly listed homes dropped 1.8% from June to July. But with sales down by roughly the same amount as new listings, the national sales-to-new listings ratio was 53.5%. According to the association, a national sales-to-new listings ratio of between 40% and 60% is generally considered consistent with a balanced national housing market. Earlier this year, the ratio was in the high-60% range.

The national (not seasonally adjusted) average price for homes sold in the country last month was $478,696, down 0.3% from the same time last year, and the first year-on-year decline in the measure since February 2013.

The report did not highlight luxury housing figures.