MNI 5 Things: Canadian Home Resales Fall Further; Prices Slow

--5 Things We Learned From the February Existing Home Sales Data

By Yali N'Diaye   

     OTTAWA (MNI) - The following are the key points from the existing home

sales data for February released Thursday by The Canadian Real Estate

Association:

     - Existing home sales fell for the second consecutive month in February,

recording a 6.5% drop on the month to 37,343, the lowest level in nearly five

years. Declines were recorded in three-quarters of all housing markets,

including Greater Toronto and Vancouver, which remain high on the Bank of

Canada's surveillance radar list. 

     - New supply increased. Listings rose 8.1%, but remain below the 10-year

monthly average. The sales-to-listings ratio decreased to 55% from 63.7%,

falling into the 40%-60% range indicative of balanced conditions. The number of

months of inventory rose to 5.3 in February, the highest in two-and-a-half

years.

     - On the price front, the Aggregate Composite MLS HPI rose by 6.9%

year-over-year, marking the tenth consecutive month of deceleration, and the

smallest gain since October 2015.

     - The BOC welcomes a housing market showdown, especially where past price

appreciation was deemed exaggerated, namely in the Vancouver and Toronto areas.

However, the central bank continues to monitor the impact of tighter housing

regulations and its own interest rate hikes, as it does not want to destabilize

economic growth given the elevated household debt. A range of new measures were

introduced in British Columbia at the end of February, and CREA Chief Economist

Gregory Klump warned it could weigh on momentum in the province into the second

quarter.

     - It is still unlikely that the BOC will panic as it underlined in its

March 7 policy statement that it will take "some time" to assess the impact of

tighter mortgage and housing regulations, while attributing the weakness of

housing data to homebuyers moving demand forward late last year before mortgage

rules become effective in January. A weakness at the beginning of 2018 was thus

expected.

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

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