Canadian existing home sales rise for second straight month in June
Source: FxWire Pro - Commentary / 16 Jul 2018 14:25:51 America/New_York
Canadian existing home sales rise for the second straight month. Sales were up 4.1 percent in June, after an upwardly revised May print to a rise of 0.6 percent. The rise in sales was widespread. Over 60 percent of local markets recorded rise in activity, led by the Greater Toronto Area (GTA) where sales rose sharply by 16.6 percent sequentially. Sales were also up in Calgary by 6.1 percent and Winnipeg by 8.6 percent. In the meantime, activity in Greater Vancouver continued to ease, and sales were also lower in Edmonton, Regina, and Ottawa.
Increased sales were met by a fall in inventory. New listings dropped 1.9 percent in June. Therefore, the national sales-to-listings ratio rose to 54.3 percent from 51.2 percent in May, moving the market a step closer to sellers’ territory. Listings fell throughout all provinces.
The average home prices were up for the third consecutive month in June, but still continues to be 1.4 percent below its year ago level. A better measure of price growth, the quality adjusted MLS home price index, rose 0.9 percent from its year ago level, only slightly lower than 1 percent year-on-year gain seen in the prior month, implying the market is stabilizing. Declines are starting to ease in the GTA, with prices falling 4.8 percent year-on-year – better than the 5.4 percent fall in May. Prices were lower than their year ago levels in most other major cities, with exception of Ottawa and Montreal, where home prices continue to rise at a strong rate of 7.9 percent year-on-year and 6.5 percent year-on-year respectively.
For the second quarter overall, sales dropped 3.1 percent on a sequential basis, with lower activity likely to be a drag on the economic growth in the second quarter. But, the degree of the drag is likely to be materially lower than in the first quarter, when sales fell by 13.3 percent, stated TD Economics in a research report. Overall, the impact on the housing market activity from the implementation of B-20 rules seems to be easing.
“We expect that resale activity hit its trough in Q2 and will begin to gradually recover thereafter. As a result, residential investment should start contributing positively to GDP growth in Q3 and Q4 of this year”, added TD Economics.
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