Canadian home sales steady in June

National home sales (seasonally-adjusted) edged down 0.8% m/m in June. The modest decline comes on the heels of four consecutive strong monthly gains, and still leaves national sales up 11% y/y and near their highest levels in over five years. Sales increased last month in about half of local markets. 

Market conditions were little changed last month. The national average new-listings-to-sales ratio was steady at 1.75, while the number of months of inventory held at 5.6. Both measures are consistent with a housing market that is largely balanced overall, but favouring sellers in some centres.

The national average house price rose 1.6% m/m (9.6% y/y) in June. The average continues to be skewed by strong sales and price gains in Canada's two most expensive markets - Vancouver and Toronto. Excluding these two markets, average prices are up 3.1% y/y.

Canada's housing market continues to show considerable resilience, supported by historically low borrowing costs, moderate job and income gains and favourable home buying demographics. National home sales over the first half of 2015 are tracking 6% above last year's pace. If maintained through the second half of the year, this would mark the second highest annual sales level after 2007.

Regional market conditions remain highly varied. Ontario and B.C. are reporting above-average sales, with demand underpinned by healthy economic expansion and solid population growth. This extends not just to the large Toronto and Vancouver markets, but to many mid-sized centres in these provinces as well. 

Demand remains much more subdued in Alberta and Saskatchewan in the face of lower oil prices and reduced population inflows, through sales and listings appear to be stabilizing as buyers take advantage of greater selection and a more competitive pricing environment. Softer employment conditions and weaker underlying demographics continue to temper housing activity in Quebec and Atlantic Canada. 

The combination of early-year mortgage rates declines and pent-up demand following adverse winter weather in much of the country has underpinned stronger-than-expected home sales this year. June may mark the return of a more steady sales trend as Canadian growth has moderated. However, the persistence of exceptionally low borrowing costs will likely maintain solid sales momentum in the coming months.