Housing flat amid debt worries
Sales up slightly, but prices down in March figures
Sales of existing homes rose 2.5 per cent in March from the previous month, while prices declined 0.5 per cent year over year, the Canadian Real Estate Association said Monday.
On a seasonally unadjusted basis, sales were up 1.6 per cent from March 2011 levels, the smallest increase since April last year.
“It reflects moderate gains in a number of major centres, including Toronto, Calgary, Montreal, Ottawa, and Quebec City,” CREA said. “Increases in these housing markets offset larger declines in Vancouver and the Fraser Valley, where activ- ity last year ran at unusually strong levels.”
The number of newly listed homes were down 0.3 per cent in March from February.
“Activity in March was up from the previous month in two-thirds of all local markets, with Toronto, Calgary, and Edmonton contributing most to the national increase,” CREA said.
The national average home price declined 0.5 per cent in March from a year earlier to $369,677.
“The slight decline in the national average price points to a tug of war between Toronto and Vancouver from the standpoint of their sales mix compared to last year,” said CREA chief economist Gregory Klump. “Average prices are up from year-ago levels in most large urban centres.”
Sonya Gulati, at TD Economics, said that “if we step back from the monthly gyrations seen in this data release, we see that price and sales’ gains are coming in fairly flat (between minus two per cent and plus two per cent. This profile is in line with our expectations for the year.”
“This pace captures increased activity from low-cost borrowing conditions, but also negative headwinds from households beginning to curb their spending in light of interest rate hikes to come and record-high household indebtedness.”
Average prices in Vancouver fell 3.1 per cent from a year earlier while prices in Toronto rose 10.5 per cent. Unit sales in Vancouver were down 29.4 per cent from March last year, compared with an increase of 4.6 per cent in Toronto. The moderation in the housing market will be “welcome in a number of quarters,” Mark Chandler, head of fixed income at RBC Capital Markets in Toronto, said in a research note. Still, the drop is unlikely to ease concerns expressed by Bank of Canada governor Mark Carney that high levels of household debt pose the greatest domestic risk to the world’s 10th biggest economy, Chandler said.
“The debt numbers are still quite elevated. I think it has to be more a pronounced move, accompanied by a slowdown on the debt side of things, for him to suggest the risks have been alleviated,” Chandler said.