August home sales spike.....

OTTAWA — Existing home sales rose 4.1 per cent in August, the first monthly increase since March, the Canadian Real Estate Association said Wednesday.

Activity via the multiple listing service was up most in Ontario and British Columbia, and accounted for most of August’s advance, the national realtors’ organization said.

Seasonally adjusted sales activity increased or remained stable in more than half of all local markets, it said.

For the remainder of the year, however, CREA said it expects sales to slow.

“Activity rose sharply over the second half of 2009 and reached levels that are unlikely to be matched in the final four months of 2010, so year-to-date comparisons are forecast to turn down in the coming months,” the report said.

The group also cautioned against further tightening of mortgage regulations, saying rising interest rates and a projected slowdown in job growth are already primed to slow the housing market.

"High sales activity late last year and earlier this year borrowed from sales this summer and will continue do so over the coming months," said Gregory Klump, CREA's chief economist. "This makes the return to more normal levels of sales activity look like a steep downward trend.

Year-over-year comparisons show those steep declines.

Unit sales were off 22.5 per cent this month compared with 2009, CREA data show.

July’s declines were worse, off 24.9 per cent, Francis Fong, an economist at TDEconomics, said in a commentary.

Further, he said, TD Economics is calling for existing sales to fall more than 20 per cent in 2011 and average prices to lose more than seven per cent.

"The hangover from accelerated home purchases is likely to persist over the rest of the year. Although economic and job growth are expected to be tepid, they will continue to support housing markets," said Klump.

The renewed slide in longer-term mortgage rates should also support the faltering market, said Douglas Porter, deputy chief economist at BMO Capital Markets.

Home prices averaged $324,928 in August, on a par with the same month a year ago, CREA said. Compared with last month though, when the average price of a home sold was $330,351, prices are down 1.6 per cent.

The number of listings rose 1.9 per cent, but remain 16 per cent below their peak last April, the agency said.

Despite August’s drop, year-to-date transactions are up 2.2 per cent compared to the first eight months of 2009, it added.

Postmedia News

 

Fact Box

 

August existing home sales

+4.1% (month over month)

 

Year-over-year sales

August 2010/August 2009/change

32,807 units/42,350 units/-22.5%

 

Average home price

August 2010/August 2009/change

$324,928/$324,843/0.0%

 

Source:Statistics Canada

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