CREA released June’s sales figures today. Below are some excerpts from BMO’s commentary:
Canadian home sales in June posted their firstannual decline since the spring of 2011.
Reports of the demise of price increases in Canadian housing have been greatly exaggerated, at least up to this point. What hasn’t been exaggerated are softer sales; the June swooncompares with an average 7% y/y rise in the first five months of 2012.
The new tighter mortgage insurance rules that kicked in last week will chill a market that had already seen 16 of 26 markets post June sales drops.
Even before the new mortgage rules kicked in, all signs suggest that the Canadian housing market was already cooling—the new rules will simply pull hard on a closing door
Calgary is arguably the strongest market, with sales up 16.7% in the past year, one of only three markets reporting double‐digit sales gains.
TD Bank’s commentary:
The data indicate that most markets remain in balanced territory with a few outperformers such as Calgary, Edmonton, Regina, and Saskatoon pushing into sellers’ territory
Today’s report provides more evidence that the housing market is beginning to come down to earth.The pace of activity in the market over the past few years was simply unsustainable given the economic backdrop and was mainly being fuelled by the record low level of interest rates.
TD Economics continues to expect declines in both sales and prices of 10-15% from current levels over the next 3 years. While this appears to be a significant contraction, it is important to note that this only brings the average price down to its mid-2009 level, essentially unwinding the imbalance that has developed over the last few years as households have taken advantage of the favourable interest rate environment.