Canadian sales fall in Feb., average price down

Volume hits 10-year low, CREA says

The average price for homes sold last month was down 5.2 per cent from last year as the number of sales dropped to a 10-year low for the seasonally weak month of February, the Canadian Real Estate Association reported Friday.

The national association highlighted the impact of a mortgage stress test that affects federally regulated lenders, including the big banks, but some analysts said February’s drop may be due in part to severe winter weather.

“February home sales declined across a broad swath of large and smaller Canadian cities,” CREA chief economist Gregory Klump said Friday in a statement.

CREA said February sales by its members fell 4.4 per cent compared with the same month last year. That is the lowest level for the month of February since 2009 and almost 12 per cent below the 10-year average for the month.

On a month-over-month basis, national home sales in February were down 9.1 per cent compared with Janu- ary for the lowest level since November 2012. It’s the biggest month-over-month drop since the mortgage stress test came into effect in January 2018.

The new stress test requires borrowers to prove that they can service their uninsured mortgage if lending rates go above a certain threshold.

The national average price for homes sold in February was $468,350, down 5.2 per cent from the same month in 2018. Excluding the Greater Vancouver and the Greater Toronto Area, two of the country’s most active and expensive markets, the national average price was just under $371,000.

“Only time will tell whether successive changes to mortgage regulations went too far, since the impact of policy decisions becomes apparent only well after the fact,” said Klump.

“Hopefully policy-makers are thinking about how to fine tune regulations to better keep housing affordability within reach while keeping lending risks in check.”

Some analysts however focused on the weather as a key factor.

Doug Porter, chief economist at BMO Financial Group, wrote in a note Friday that February is normally a seasonally slow month even during a tame winter.

“This was most patently