MNI DATA IMPACT: Canada Home Sales Rise For 6th Straight Month

Realtors boost forecast through next year on cheaper mortgages

By Greg Quinn

     OTTAWA (MNI) - Canadian home sales increased for a sixth consecutive month

in August as falling mortgage rates lured buyers, a factor that also led

realtors to lift their forecasts through next year.

     Sales rose 1.4% on the month to 42,127 units, the highest level in more

than a year according to a report Monday from the Canadian Real Estate

Association. The 8% increase in the Fraser Valley near Vancouver helped lead the

increase. While sales rose a slower 0.9% in Toronto, strong demand outside of

Canada's largest city boosted CREA's benchmark price index 0.8% on the month,

the most in more than two years. 

     Buyers are returning more than a year after governments tightened mortgage

rules and imposed foreign buyer taxes to prevent a potential crash in Vancouver

and Toronto. Mortgage rates have fallen along with a plunge in global bond

yields, helping buyers who were squeezed out of the market by the new 'stress

test.' 

     CREA boosted its forecast for home sales growth this year to 5% from a June

prediction of 1.2%, citing lower mortgage rates. Prices are now seen climbing

0.5% this year instead of falling by 0.6%. In 2020, sales will rise by 7.5% and

prices by 2.1%, the new forecast showed.

     Signs of a revival in Vancouver and Toronto housing may give the Bank of

Canada another reason to avoid cutting interest rates this year. While Governor

Stephen Poloz had said there is evidence the market is stabilizing, Canadians

are still carrying record levels of debt. 

     Sales in Vancouver and Toronto have now climbed by more than 10% over the

last 12 months, more than double the national gain of 5%, CREA reported today. 

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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