Home sales fell in June by their largest amount in seven years, the Canadian Real Estate Association said Monday, as nearly three-quarters of all markets slowed down during what is normally the most popular time of the year for real estate.
CREA said home sales fell by 6.7 per cent last month compared to May — the sharpest monthly decline since 2010 and the third straight monthly contraction.
Home sales have now fallen 14 per cent since peaking in March. The April to June period is typically a busy time for home sales as the warmer weather tends to bring out buyers.
Prices down, too
More than 70 per cent of all markets saw fewer homes sold in June than they did in May. But Ontario makes up a large percentage of Canada's housing market, and new rules aimed at slowing the housing market in and around Toronto starting in April appear to be impacting the national numbers.
"Changes to Ontario housing policy made in late April have clearly prompted many home buyers in the Greater Golden Horseshoe region to take a step back and assess how the housing market absorbs the changes," said CREA's chief economist, Gregory Klump. "The recent increase in interest rates could reinforce a lack of urgency to purchase or, alternatively, move some buyers off the sidelines before their pre-approved mortgage rate expires."
While sales have dropped, prices on average are flat on an annual basis. The average price of a Canadian home sold in June was $504,458, a 0.4 per cent increase in the past year.
But that figure has dropped by nearly 10 per cent from the $559,317 average price in April.
"The Canadian housing market is now in its third month of what is expected to be a soft landing," TD Bank economist Diana Petramala said of the numbers. "The weakness was triggered by changes to provincial and federal housing policy, but it will ultimately be higher interest rates that help solidify it."
On a seasonally adjusted basis, the average house price rose in June in Alberta, Manitoba, New Brunswick and Prince Edward Island. In every other province, the average declined compared to the previous month.
Prices have been skewed higher for a long time by the hot Toronto and Vancouver markets, but the price in both fell in June compared to May, dragging down the national figure.
If those two cities are stripped out, the average Canadian house cost $394,660 in June. A year ago, that figure stood at $374,760, which means excluding Toronto and Vancouver, average Canadian house prices have increased by just over five per cent in the past 12 months.
Nationally, Petramala expects prices to decline slightly into next year, but the national average will mainly be lower because of a cooldown in British Columbia and Ontario.
"Elsewhere in the country, the improving economic conditions should help offset some the impact of gradual interest rate hikes, with home prices and sales expected to trend higher," she said.