MNI DATA IMPACT: Canada 2020 Home Sales Poised for Record High

Canadian home sales are poised for an annual record, the country's main realtor group said Tuesday, fueled by rock-bottom mortgage rates and a rush to find bigger homes during the Covid-19 pandemic.

Sales through November are up 10.5% to 511,449 units from the same period in 2019, the Canadian Real Estate Association said. That brings the pace to just 0.3% less than the record set in 2016, and CREA projects the December figures will take the annual gain to 11.1% and a record 544,413 units for 2020.

"Many Canadian housing markets continue to see historically strong levels of activity, so much so that a new annual sales record this year is looking more likely every day," CREA Chair Costa Poulopoulos said in a statement.

Sales fell back 1.6% in November from monthly records set earlier this year, but remain 32% higher than the same month a year ago. The average sales price rose 13.8% from a year earlier to CAD603,344, including CAD1.08 million in Vancouver.

The housing market swung wildly this year, plunging when the spring lockdown made open houses impossible, then a surge in demand as people swapped downtown condos for bigger houses in the suburbs. The gains are also remarkable in light of the cut off in immigration flows that had driven population growth, underlining that domestic demand rather than foreign speculators pushed prices to new heights.

FURTHER GAINS IN 2021

The IMF, Bank of Canada and the federal banking regulator have warned for years about potentially dangerous price speculation and a rise in heavily indebted households. Those dangers may still exist because almost a million Canadians took advantage of a six-month program allowing payment deferrals.

The market remains tight with a record low 2.4 months worth of inventory of homes for sale in November.

"Current trends and the outlook for housing market fundamentals suggest activity will remain relatively healthy through 2021, with prices either continuing to climb or remaining steady in all regions," CREA's report said. Average prices will climb 9.1% next year and sales by 7.2%, bolstered by BOC rates expected to be on hold into 2023, CREA said in a new quarterly forecast.

Earlier today, the federal housing agency also reported housing starts rose 14.4% to an annualized pace of 246,033 units in November, faster than economist predictions of 215,000.