Sales of existing homes cooled in February from the previous month, according to the Conference Board of Canada, a trend that is expected to continue in the coming months as tighter mortgage rules keep more buyers out of the market.
Even before the new rules took effect on March 18, the Ottawa-based think-tank said its metro resale index for February was down in 19 of 28 areas from January levels.
"Softening sales discouraged potential vendors," the board said, with listings falling below the previous month in 15 markets. Listings were down from year-earlier levels in 18 areas.
"Still, despite this easing, 25 of our 28 markets remain in a 'balanced' position," it said.
The Conference Board said softer markets also tempered price growth, with increases slowing in 16 markets.
On a year-over-year basis, however, 24 of 28 areas recorded price gains in February. Still, volumes remained below February 2010 levels in 23 areas.
The board's reading on the housing market follows a report last week by the Canadian Real Estate Association that showed February existing home sales falling 5.9 per cent from a year earlier. Homes sale dropped 1.6 per cent from January, on a seasonally adjusted basis, the industry group said.
CREAsaid the average national sales price in February was up 8.8 per cent to $365,192.
Tighter mortgage rules —including shorter amortizations —along with higher interest rates and elevated household debt, "should keep house prices on a tight leash," BMO Capital Markets said in a report earlier this month.