Correction in Canada's housing market will be a regional affair: BMO Capital Market

Quotes from BMO Capital Market:

- Canadian home sales fell 3.1% on a seasonally-adjusted basis in January, the second significant monthly decline in a row and leaving sales down 2.0% from year-ago levels.

- Sales are now a bit below the 10-year average, and the sales/new listings ratio has dipped below 50 for the first time in more than two years. Moreover, the backlog of unsold homes has risen to 6.5 months' supply, the highest in almost two years. While CREA still suggests that the market is balanced, there's little doubt that the swift chill in the prior market-leading cities has cooled the broader national trends.

- Canada's housing market is cooling notably, largely because of the sudden deep chill in the previously hottest cities. However, there is still plenty of regional variation churning below the surface. We suspect that with borrowing costs still plumbing the depths and many provincial economies holding up, any housing correction will be a specific regional affair.