Home sales in Canada edge back resulting in revised forecast
December 19, 2012
National home sales activity edged back down 1.7% in November on a month-over-month basis, returning to August levels, according the Canadian Real Estate Association (CREA)
. Demand geared down in August in the wake of tighter mortgage lending rules, and has since been running about 8% below levels in the first half of the year.
Actual (not seasonally adjusted) activity came in 11.9% below November 2011 levels. Sales were down on a year-over-year basis in three of every four of all local markets in November, including most large urban centers. Calgary stood out as an exception, with activity up 10.6% from a year ago.
“National sales activity lacks the momentum it had a year ago,” said Gregory Klump, CREA’s Chief Economist. “Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity.”
As a result of the slowing in the wake of new mortgage lending regulations CREA has updated its forecast for home sales for 2012 and 2013. National resale housing activity is now projected to reach 456,300 units in 2012, which represents a 0.5% decline from 2011, and stands 0.95% below the 10-year average (2002 – 2011).
Sales activity is expected to be less volatile next year than it was in 2012. In 2013, CREA forecasts that national sales activity will recede by 2% to 447,400 units. This is a slightly lower level of activity than previously forecast, reflecting the continuing impact of new mortgage rules. Moderate economic, job, and income growth will temper the impact of recent mortgage rule changes, which are not expected to dampen activity much more than has already been felt until interest rates are expected to begin rising in late 2013.