Canadian existing home sales rise in August, home prices likely to grow further

Canadian national existing home sales rose 1.4 percent sequentially in August. In the meantime, sales growth for July was upwardly revised to 4 percent, giving an additional touch of positivity to the report. Sales rose more than half of local markets, with a strong 18.2 percent gain in Winnipeg topping the chart.

In B.C., sales rose 3.2 percent, underpinned by gains in Vancouver and Fraser Valley. In the former, sales rose 15 percent year-on-year, supported by falling mortgage rates. In the Prairies, sales came in flat in Alberta, with a gain in Calgary, countered by falls in Edmonton and other markets. Sales came in higher in Saskatchewan while Winnipeg’s healthy gain rose 15.5 percent in Manitoba.

Sales growth in Ontario continued with its recent strong trend, rising 1.7 percent. Sales in Toronto rose modestly by 0.9 percent. Nevertheless, year-on-year sales in Toronto came in higher at 12.8 percent in August, underpinned by stronger activity in the single-detached market.

Sales rose 0.4 percent sequentially in Quebec, but rose at an even more impressive 10.9 percent year-on-year, buoyed by a solid economy and decent affordability conditions. It was a softer month in more the volatile Atlantic Provinces, as sales fell in Newfoundland and Labrador. National new listings rose 1.1 percent sequentially in August, stimulated by gains in Alberta and B.C.

Sales-to new listings ratios show that markets continue to be relatively tight in Quebec, Nova Scotia, and Ontario. In the latter Province, markets are tighter outside of Toronto. Conditions are especially tight in Ottawa and London. On the contrary, markets are looser in Alberta, Saskatchewan and Newfoundland and Labrador.

The average home price rose 0.7 percent sequentially in July, marking the sixth straight monthly gain. On a year-on-year basis, prices rose 3.9 percent, driven by gains in Ontario and Quebec. Markedly, average prices are higher year-on-year in B.C. for the first-time early 2018, underpinned by less drag from Vancouver. The quality-adjusted MLS home price index also rose year-on-year in August, coming in at 0.9 percent.

“As activity has improved, housing markets across the country have become tighter. This suggests that further growth in home prices is likely, although affordability challenges in Toronto, Vancouver and some surrounding regions should cap gains in these markets”, said TD Economics in a research report.