The Canadian Real Estate Association released its monthly market figures for August 2018, reporting a slight increase in sales activity from the previous month.
Compared to July 2018, sales increased 0.9% in August, which is the fourth consecutive monthly gain. The Greater Toronto Area led the way in sales activity. Year-over-year, sales were down 3.8% on a national level due to a big dip in British Columbia.
“Improving national home sales activity in recent months continues to obscure significant differences in regional trends for home sales and prices,” says Gregory Klump, CREA’s Chief Economist. “Moreover, recent monthly sales increases are diminishing, which suggests that the recent rebound may be starting to lose steam.”
While the national home supply is sitting at 5.2 months – right in line with the long-term average – supply in the GTA dropped. As supply continues to be an issue in the GTA, high prices will prevent families from moving-up and first-time buyers from getting into the market.
House prices were up year-over-year in most regions of the Greater Golden Horseshoe, except for Barrie and District where pricing fell 2.7%. Hamilton–Burlington saw the greatest year-over-year price increase, jumping 7.2%; Niagara Region followed with an increase of 6.6%; Guelph prices increased by 5.5%; the GTA went up 1.4%; and Oakville–Milton saw a 1.2% increase.
Nationally, the average selling price bumped up 1% compared to the same period last year, hitting just over $475,500. If you remove Greater Vancouver and the GTA from the equation, the average falls to just below $382,000.
The CREA also adjusted its resale housing market forecast for the rest of 2018 and 2019. The mortgage stress test and signs of increasing interest rates continue to impact the market.
“The new stress test on mortgage applicants implemented earlier this year continues to weigh on national home sales,” says CREA President Barb Sukkau. “The degree to which the stress test continues to sideline homebuyers varies depending on location, housing type and price range. All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to in the future.”
The GTA was showing signs of rebounding this fall, but CREA says it looks like the market may already be “losing steam,” mostly due to the possibility of interest rates increasing again this year and again throughout 2019.
CREA expects national home sales to drop 9.8% to 462,900 this year, with strong activity in Ontario offsetting the greater slowdown in BC. Both provinces will see double-digit drops in sales activity.
The average price will also drop down to $494,900 this year, which is 2.8% lower compared to 2017. In Ontario, home prices will drop 1.7%, due to fewer high-priced home sales in Toronto.
In 2019, the CREA is predicting home sales will bounce back with a 2.1% increase to 472,700. Prices are also expected to jump up to $508,400 with normal seasonal patterns returning. Home prices in Ontario are predicted to increase 3.3%, which is the greatest forecast out of all the provinces.