CREA: August Home Resales +1.3%; Flat Ex GTA; Price Gains Slow

--More Rate Hikes Are Downside Risk To Sales Forecasts

--2017 Sales Revised Down to 506,900; 2018 495,100

By Yali N'Diaye   

     OTTAWA (MNI) - Existing home sales recovered 1.3% in August from July,

fueled by a 14.3%  surge in the Greater Toronto Area without which national

sales would have been flat, The Canadian Real Estate Association reported

Friday.

     Overall, however, trends were diverging and the number of markets recording

higher sales was roughly the same as the number of declining markets in August,

the report said.

     CREA President Andrew Peck said expected rate increases can prompt some

buyers to make an offer before, while others move to the sidelines.

     Going forward, "the picture will become clearer once mortgages that were

pre-approved prior to recent interest rate hikes expire," added CREA Chief

Economist Gregory Klump.

     Meanwhile, the number of listings decreased 3.9% on the month to 70,327,

helping lift to sales-to-listings ratio to 57% from 54.1%, still reflective of

balanced market conditions. 

     When comparing the sales-to-listings ratio to its long-term average, the

number of balanced markets increased to 70% from 63% the previous month.

     The number of months of inventory, another indicator of the supply-demand

conditions, edged down to 5.0 months from 5.1 months. 

     On the price front, the Aggregate Composite MLS HPI rose 11.2%

year-over-year, marking the fourth consecutive month of slowdown.

     The average sales price was up 0.4% on the month to C$491,373, and on a

12-month unadjusted basis, it rose 3.6% to C$472,247, still "heavily" skewed by

high prices in Greater Vancouver and Greater Toronto.

     Looking ahead, CREA cut its sales forecasts for 2017 to 506,900,

representing a 5.3% decline from 2016, mainly as a result of lower sales in

Ontario, which should only recover "partially later this year."

     In 2018, sales are expected to decrease 2.3% from 2017.

     "Tightened mortgage rules, higher mortgage default insurance premiums,

changes to Ontario housing policies and higher interest rates are factors that

will continue to lean against housing market activity over the rest of the year

and into 2018," CREA said.

     "Additional interest rate increases and further tightening of mortgage

regulations represent downside risks to the sales forecast, while improving

Canadian economic fundamentals represent upside risks," it added.

     The national average price should edge down 0.6% after rising 3.4% in 2017.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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