Canada’s home sales rise for first time since March but still have a long way to go

The Canadian Real Estate Association says there was a slight improvement in the resale housing market last month, although it’s still slower than a year ago — mainly due to a slowdown in Vancouver.

The association said Monday sales in September were up 2.5% from August — the first month-to-month gain since March.

Compared with September 2011, however, the number of deals across the country last month was down 15.1%.

The association said there was still a balance between the number of homes for sale and the number of buyers in September but conditions have eased.

CREA attributed the slowdown to new rules brought in by Ottawa that make it harder for first-time buyers to qualify for mortgages.

However, other observers have noted that reduced affordability after years of rapid price increases — particularly in some markets such as Vancouver and Toronto — and an uncertain world economy have also dissuaded buyers.

“National activity is likely to remain down from year-ago levels over the fourth quarter of 2012,” said Gregory Klump, CREA’s chief economist.

“While some first time home buyers may no longer qualify for mortgage financing under the new rules, it is likely that many others are stepping back and reassessing how much house they can realistically afford, which is one of the things new mortgage rules were designed to do.”

The national average home price was up 1.1% in September from a year earlier.

But the MLS HPI home price index, which also takes into account other factors, showed its smallest gain since May 2011, rising by 3.9% in September.

The association said Vancouver, the country’s most expensive residential real-estate market, skewed the national results.

Excluding that city, the national average price was up 3.4% from a year ago.

The MLS HPI in Vancouver posted a 0.8% decline year-over-year in September. In contrast, Calgary had a 6.5% increase in the index, the Toronto area was up 5.7%, the Montreal area was up 2.2% and the Fraser Valley in southern British Columbia was up 2.1%.

Regina had the biggest increase among markets measured by the HPI, with a gain of 14.2% from September 2011.

The national sales-to-new listings ratio, a measure of market balance, stood at 49% in September 2012, remaining near the midpoint of a balanced market.

Based on a sales-to-new listings ratio of between 40 to 60%, a little less than two thirds of all local markets were in balanced market territory in September.

Source: Canadian Press

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