Release: The Canadian resale housing market holds steady in March
- Existing home sales in unit terms were essentially unchanged in March, up only 0.1% in seasonally adjusted terms versus February. It seems that purchasers looking to buy ahead of the March 18th change to mortgage rules did so earlier in the year, raising first quarter home sales 4.5% higher than Q4.
- While CREA cites that demand for existing homes was relatively stable in most large urban centers in March, the quarterly increase in sales mainly reflected demand in Vancouver and Toronto.
- On the supply side, new listings fell 5% in March, tightening the national resale market. The sales-to-new listings ratio at 0.57, still safely in “balanced” territory, but up from 0.54 in February. And March still marks the firmest reading for national market balance in a year.
- The seasonally adjusted average price rose 0.7% in March, while the unadjusted price is up 8.9% from a year ago. Throughout the first quarter of this year the national price increase has been distorted by strong activity in expensive areas of Greater Vancouver, with prices excluding Greater Vancouver up a more moderate 4.3% year-over-year.
- The March 18th changes to mortgage rules seem to have pushed some sales into the earlier part of the quarter helping to lift sales in Q1 to their highest level in a year. However, we don’t expect Q1’s pace of sales to be sustained.
- That said, decent employment and income gains and a still-low interest rate environment continue to provide a relatively favourable backdrop for home sales, and after the rule-change inspired gyrations resolve, we see sales gradually moderating as interest rates rise in the second half of this year.
- With existing home sales relatively unchanged in March, the Canadian housing market activity seems to have settled into a plateau in line with the 5-year average for sales activity. With the rush-to-buy ahead of the mortgage rule change concentrated in the Vancouver area, and that region also leading the price increase at the national level, the area remains a key wild card to watch in the coming months. But apart from that region, the housing market remains in a well-balanced position on the whole, and with activity likely to ebb as interest rates start rising in July, we don’t see home prices outpacing inflation over the next couple of years.