Growing Canadian home sales in forecast

TORONTO The Canadian Real Estate Association says there will be more sales this year than it previously forecast because of population and job growth and a decline in long-term mortgage rates.

National home sales are now projected to recover to 482,000 units in 2019, an increase of 19,000 units from the June forecast, the association said in a statement.

Sales are forecast to rise by 7.5 per cent to 518,100 units next year, it said. That’s still off the high of 540,000 sales hit in 2016, CREA noted.

Economic fundamentals ... remain strong outside of the Prairies and Newfoundland.

British Columbia sales are expected to decline 5.4 per cent this year compared to 2018, but early trends show that trend may be abating, it said. The western downswing will be more than offset by expected gains of 8.3 per cent in Ontario and 9.7 per cent in Quebec, CREA said.

“In recent months, home prices have generally been stabilizing in British Columbia and the Prairies, a measure which had been falling until recently,” CREA said. “Meanwhile, price growth has begun to rebound among markets in the Greater Golden Horseshoe (GGH) region amid ongoing price gains in housing markets east of it.”

More importantly for home buyers and housing markets, longer-term mortgage rates have been declining, CREA said. “Economic fundamentals underpinning housing activity remain strong outside of the Prairies and Newfoundland and Labrador,” it said. “Population and employment growth have both remained supportive and the unemployment rate remains low . ... expectations have become widespread that the Bank of Canada is unlikely to raise interest rates over the rest of the year and into next.”

Besides B.C., sales are also depressed in Alberta, Saskatchewan and Newfoundland and Labrador, while Manitoba, Quebec and New Brunswick are expected to set new annual sales records, the CREA said. Prices are expected to stabilize at a national average of $491,000 because of the diverging trends of Eastern and Western Canada, it said. Average prices in 2019 are expected to fall in B.C., Alberta and Saskatchewan, while rising in Ontario, Quebec and the Maritimes, it said.

CREA projects the national average price to gain by 2.1 per cent next year to $501,400, remaining below its 2017 level.

The new forecast comes as August home sales rise 1.4 per cent amid a market rebound after adjusting to various policy changes, CREA said in a separate report.

The number of newly listed homes rose 1.1 per cent in August, with sales and new supply up in tandem. The association’s home price index rose 0.8 per cent month-on-month in August 2019, the largest increase in more than two years. Financial Post