Download the full CREA statistics report for July: here
July Report Highlights
• National home sales rose 0.8% from June to July.
• Actual (not seasonally adjusted) activity was 7.2% higher than July 2013 levels.
• The number of newly listed homes edged up 0.4% from June to July.
• The Canadian housing market remains in balanced territory.
• The MLS® Home Price Index (HPI) rose 5.3% year-over-year in July.
• The national average sale price rose 5.0% on a year-over-year basis in July
TD Economics: The renewed momentum in Canada’s housing market in recent months represents both a bounce back from weather-related weakness over the winter months and a response to lower mortgage rates. Potential buyers who may have sat on the sidelines last year as interest rates rose, are being enticed back to the market by lower interest rates. Meanwhile, a strengthening in economic growth continues to support the fundamental demand in the housing market.
However, existing home prices (average and on a quality-adjusted basis) are on track to outstrip income growth for a second straight year in 2014, which adds to concerns about an already-overpriced market. Affordability, even at low interest rates, has become an obstacle in many markets. This contributes to our view that the Canadian housing market will cool later this year and into 2015 as interest rates are likely to nudge higher. Another factor which is expected to weigh on prices is the supply growth in the pipeline due to the record number of new homes that are under construction in many markets. (Read full commentary here )
BMO Economics: Canada’s housing market remains healthy and well balanced overall, albeit with sizeable (though perhaps lessening) disparities across regions. The only gripe is that prices in the three hot regions—Calgary, Toronto and Vancouver—are rising faster than family income, further straining affordability. While there will
always be condos to satisfy the demand for reasonably affordable housing in these cities, the widening gap in prices versus detached homes means that a lot of young, growing families will be forced to live the condo lifestyle for much longer than they intend. In addition, continued rapid price gains in these cities will increase their vulnerability to a shock. (Read full commentary here )
RBC Economics: This latest crop of statistics on Canada’s housing market indicates that upward momentum is being sustained at this point, and that any slowing in activity will have to wait a little longer. We continue to expect,nonetheless, that the market will transition to lower resale levels—closer to the long-term average—and that the rate of price increases will moderate over the coming year. We believe the current momentum reflects recent declines in fixed mortgage rates to a large degree, which we expect will gradually reverse in the period ahead as the economy strengthens. In our view, pressures emanating from rising prices and gradually increasing interest rates will erode housing affordability, and in turn will weigh on homebuyer demand. (Read full commentary here )