9:30 AM, E.T. | December 17, 2012
Homes sales in Canada fell 1.7 percent in November from the previous month and were down 11.9 percent from the same time last year, the Canadian Real Estate Association (CREA) said on Monday – adding further evidence of a slowdown in Canada's housing market.
The association once again pointed to tighter mortgage regulations put in place by Ottawa over the summer as the main reason for the pullback in home sales.
"National sales activity lacks the momentum it had a year ago," Gregory Klump, CREA's chief economist, said in a statement. "Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity."
Faced with a slowing housing market, CREA also announced on Monday that it has cut its forecast for this year and next.
The association now expects 456,300 homes to be sold this year – marking a 0.5-percent decline from 2011 and below the 466,900 forecast it made in September.
For 2013, CREA expects home sales to decline two percent, falling to 447,400 units – again, below the forecast it made in September for 457,800 sales in 2013.
"This is a slightly lower level of activity than previously forecast, reflecting the ongoing impact of new mortgage rules into next year," CREA said in a statement announcing the new forecasts. "The continuation of moderate economic, job, and income growth will temper the impact of recent mortgage rule changes, which are not expected to dampen activity much more than has already been felt until interest rates are expected to begin rising in late 2013."
While the number of sales will continue to inch lower, CREA expects housing prices to stay firm. The association forecasts that home prices will rise by 0.3 percent to $363,900 in 2012, with most provinces posting an above average boost in housing prices.
"The smaller gain in average price nationally as compared to most provinces largely reflects a decline in sales activity among more expensive housing markets compared to 2011, particularly in British Columbia and more recently in Ontario," CREA said.
In 2013 housing prices will edge up 0.3 percent to $365,100, which is slightly higher than its previous forecast of $364,500.