Canadian sales of existing homes fall in December

Sales of existing homes in Canada fell in December from November as weakness in Alberta and parts of Ontario offset gains in other markets, a report from the Canadian Real Estate Association showed on Friday.

The industry group for Canadian real estate agents said sales activity was down 0.6 per cent last month from November. Actual sales for December, not seasonally adjusted, rose 10 per cent from December 2014.

CREA’s home price index rose 7.3 per cent from December 2014.

Sales were down in the month in slightly more than half of all markets, CREA said, with declines in Calgary, Edmonton, Toronto suburbs and Hamilton outweighing gains elsewhere.

A prolonged slump in oil and other commodity prices has sideswiped the economy, particularly in the energy heartland of Alberta, where sales and prices have fallen.

“The recent decline and uncertain outlook for oil prices means that housing market prospects are unlikely to improve in the near term in regions where job market prospects are tied to oil production,” CREA chief economist Gregory Klump said.

By contrast, housing in Toronto and Vancouver, the two largest markets, remains robust, and some economists believe the markets are overvalued and ripe for correction.

CREA said changes to mortgage regulations affecting down payment levels, which take effect in February, had been expected to bring forward activity – but tight conditions in Toronto and Vancouver blunted that impact.

“Buyers there had been expected to bring forward their purchase decisions before new regulations take effect in February 2016, but they faced a growing shortage of supply,” CREA president Pauline Aunger said.

The national sales-to-new-listings ratio eased to 55.5 per cent in December – its lowest reading since March. A ratio between 40 per cent and 60 per cent is generally consistent with a balanced market.

The inventory of houses on the market was 5.4 months, unchanged from November at the lowest level in nearly six years. The tight market in Vancouver and Toronto has dragged the national inventory level lower.

The national average price for homes sold in December was C$454,342 (HK$2.43 million), up 12.0 per cent from December 2014.