Resales of Canadian homes fell 2.1 percent in July from June, the fourth straight monthly decline, as the cooling of Toronto's housing market continued, the Canadian Real Estate Association said on Tuesday.
It said actual sales, not seasonally adjusted, were down 11.9 % from July 2016. Home prices were up 12.9 % from a year earlier, according to the group's home price index. July's decline in sales was about one-third the magnitude of those in May and June, suggesting the impact of the new housing rules announced by Ontario in April may be diminishing, the group said.
Ontario, Canada's most populous province and home to Toronto, introduced a 16-point plan to douse speculation blamed for fueling an extended housing boom. The changes included a 15-percent foreign buyers' tax.
A central bank interest rate hike in July may have also brought forward some activity as buyers looked to make an offer before their pre-approved mortgages expired. "This suggests sales may be starting to bottom out amid stabilizing housing market sentiment. Time will tell whether that’s indeed the case once the transitory boost by buyers with pre-approved mortgages fades," CREA Chief Economist Gregory Klump said in the report.
Its data showed new listings fell again, down 1.8 percent, led by the Greater Toronto Area. Listings had surged in the two months following the Ontario rule changes as sellers tried to cash out before the market cooled. The drop in new listings bumped up the sales-to-new listing ratio to 53.5 percent, within the 40-to-60 percent range considered a balanced market. The ratio had hit nearly 70 percent earlier in the year.
CREA said markets neighboring Greater Toronto, which had recently favored sellers, have begun to tilt toward buyers' market territory. For years, bidding wars in Toronto had driven double-digit price gains in the city, sparking fears of a bubble.There were 5.2 months of inventory at the end of July 2017, the highest level since January 2016 and up by more than a full month from where it stood in March, the report showed.
While year-over-year price gains remained in the double digits based on the group's home price index, the rate of appreciation has slowed and the actual national average price for homes sold in July was C$478,696 ($375,418), down 0.3 percent from a year earlier, CREA said.
