Home sales stable but underperforming 2012

Data from the Canadian Real Estate Association suggests national home sales edged upward in March, though they were well below levels recorded last year.

The number of home sales processed in Canada rose 2.4% on a month-over-month basis last month. Also, stats improved in more than half of all local markets from February to March.

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This trend was led by gains in Vancouver, Fraser Valley, Calgary, Toronto, Montreal, Saskatoon, Hamilton-Burlington, and Kitchener-Waterloo.

“National sales have been fairly stable since last summer,” says CREA president Laura Leyser. “As the spring market picks, [we’ll] see whether the March sales increase marks the beginning of an improving trend.”

In the meantime, she says to remember local market conditions often differ from what’s reported at the national level. This means buyers and sellers have to consult with professionals to gauge how the housing market is shaping up where they’re buying.

March sales were largely constrained by the Easter holiday and by the extra full weekend at the end of the month. This extra weekend causes a “trading day effect” that holds back sales.

That said, seasonal adjustments strip out normal seasonal fluctuations and these trading day effects.

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“Activity in the months ahead will reveal whether the monthly improvement in seasonally adjusted March sales reflects technical seasonal adjustment factors, or rather a fundamental improvement in demand,” says Gregory Klump, CREA’s chief economist.

He adds, “The factors that crimped last month’s sales weren’t in play for the same month last year, resulting in speculation that the gap between sales activity this March and March of 2012 would be bigger than between February this year and last year. [If the gap] improved marginally, [that] speaks to the resilience of housing demand in Canada.”

What’s more, “analysis will likely continue to focus on how sales remain down, but this shouldn’t come as a surprise given mortgage regulations and lending guidelines were yet to be tightened in 2012. Since those came into force, sales have held steady.”

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The number of newly listed homes rose 3.2% month-over-month in March. New listings were up in about two thirds of all local markets, led by Toronto, Montreal, London and St. Thomas, and Calgary.

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. This stat was little changed in March as well.

Nationally, there were 6.5 months of inventory at the end of March 2013. This was down from 6.7 months reported at the end of February. The drop resulted from the increase in sales combined with a third consecutive decline in the overall supply of homes for sale.

The actual national average price for homes sold in March 2013 was $378,532, representing an increase of 2.5% from the same month in 2012.

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