Canada’s housing market still well-balanced

National home sales activity posted its fifth consecutive month-over-month decline in January 2014, show statistics from the Canadian Real Estate Association (CREA).

Highlights:

• National home sales fell 3.3% from December to January.
• Actual (not seasonally adjusted) activity stood 0.4% above January 2013 levels.
• The number of newly listed homes edged up 0.2% from December to January.
• The Canadian housing market remains in balanced territory.
• The national average sale price rose 9.5% on a year-over-year basis in January.

Read: Is U.S. real estate still a bargain for snowbirds?

The number of home sales processed through Canadian real estate listing systems fell 3.3% on a month-over-month basis in January 2014. It’s the fifth straight monthly decline, and leaves activity 9.1% below the peak, reached in August 2013.

Sales were down on a month-over-month basis in more than 60% of all local markets in January, with declines in Greater Toronto, Greater Vancouver, London and St. Thomas, Windsor-Essex, and a number of other Southern Ontario markets.

Read: Housing starts dip

Canada’s actual (not seasonally adjusted) activity stood 0.4% above levels posted in January 2013. Year-over-year increases were recorded in less than half of all local markets, with gains across most of British Columbia and Calgary offset by declines in Southern Ontario, Quebec, and much of the East Coast.

“We’ll be keeping a close eye on February’s numbers for signs of a rebound in Southern Ontario, where sales reflected deferred home purchases due to cold weather rather than home buyers getting cold feet,” says CREA chief economist Gregory Klump.

The number of newly listed homes edged up 0.2% on a month-over-month basis in January. New supply was up in just over half of all local markets, led by Edmonton, Regina, Ottawa, and Montreal and offset by declines in Greater Vancouver, Calgary, and Greater Toronto.

Read: Housing starts dip

With sales down and new listings little-changed, the national sales-to-new listings ratio eased back to 52.4 per cent in January compared to 54.2 per cent in December. This remains well within balanced territory marked by the range from 40 to 60 per cent, as has been the case since early 2010. Just under two-thirds of all local markets posted a sales-to-new listings ratio in this range in January.

The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 6.4 months of inventory at the national level at the end of January 2014, up from 6.3 months at the end of December. As with the sales-to-new listings ratio, the current level of the months of inventory measure indicates that the Canadian housing market remains well balanced.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.