Real estate association expects sales in second half of year to ease

Canadian home sales started the year at a torrid pace, fuelled by Vancouver and Toronto, but the Canadian Real Estate Association says sales in the country’s hottest markets are expected to slow in the second half in the face of high prices and a shortage of available properties.

“Activity should begin to rebalance away from B.C. and Ontario as supply shortages put upward pressure on home prices and constrain transactions, even as housing demand remains strong in these provinces and interest rates remain low,” CREA said in its latest outlook Wednesday.

“Accordingly, sales activity over the second half of the year is expected to ease in B.C., Ontario and on a nation- al basis.”

Still, due to the strong start to the year, the association raised its fullyear forecast for home sales to a record 536,400, a 6.1-per-cent increase. That compared with its March forecast calling for an increase of just 1 per cent to 511,400.

The new forecast came as CREA reported sales through its MLS system dropped 2.8 per cent monthover-month in May. But compared with last year, sales in May were up 9.6 per cent, 15.1 per cent above the 10-year average for the month.

TD Bank economist Diana Petramala said even with the May sales drop, the spring selling season has been hot for Ontario and British Columbia.

“In fact, May’s decline looks more like a supply story rather than a demand story, with not enough homes on the market to fulfil what appears to be insatiable demand,” Petramala said.

For May, the number of newly listed homes fell 3.2 per cent.

The national sales-to-new-listings ratio climbed to 64.8 per cent in May, suggesting a seller’s market and the highest reading since October 2009.

CREA says a ratio between 40 and 60 per cent is generally consistent with a balanced market.

The national average price of a home sold in May was $509,460, up 13.2 per cent from a year ago.

Excluding Vancouver and Toronto, the average price for a home in May was $375,532, up 9.1 per cent from May 2015. The national average price, excluding British Columbia and Ontario, was $310,007 in May, down 0.7 per cent year over year.