CREA: February 2014 Canadian Home Sales

• National home sales edged up 0.3% from January to February.
• Actual (not seasonally adjusted) activity stood 1.9% above February 2013 levels.
• The number of newly listed homes edged up 0.6% from January to February.
• The Canadian housing market remains in balanced territory.
• The national average sale price rose 10.1% on a year-over-year basis in February.
• The MLS® Home Price Index (HPI) rose 5.1% year-over-year in February.

The number of home sales processed through the MLS® Systems of Canadian real estate Boards and Associations was little changed from January to February 2014, edging up just three tenths of one per cent. The February result follows five straight monthly declines and leaves activity 9.3 per cent below the peak reached in August 2013.

The number of local housing markets where February sales were up ran roughly even with the number of markets where sales declined, with little change in activity among most of Canada’s large urban markets.

“Sales in February rebounded in some of the smaller local markets where activity was impacted by harsh winter weather in January,” said CREA President Laura Leyser. “The strength of sales activity during the crucial spring market period will be influenced by the availability of listings, which varies considerably from market to market. To best understand how the balance between available listings and demand is shaping up this spring where you live or might like to, your best bet is to talk to your local REALTOR®.”

Actual (not seasonally adjusted) activity stood 1.9 per cent above levels posted in February 2013. Most of the year-over-year gain reflects increased sales activity in British Columbia’s Lower Mainland and to a lesser extent in Calgary.

“Sales activity this spring will be supported by the recent decline in the benchmark five-year conventional mortgage rate,” said Gregory Klump, CREA’s Chief Economist. “That’s because buyers needing mortgage default insurance who opt for a term of less than five years must qualify for mortgage financing based on that rate, and not a discounted rate that their lender may be offering. The support will be of particular importance in some of Canada’s larger urban markets where home prices are higher than those in smaller markets.”

The number of newly listed homes was also little changed in February, having edged up 0.6 per cent on a month-over-month basis. As with sales activity, there was a roughly even split between the number of local markets where new listings were up from the previous month and those where they were down. The number of new listings nationally would have declined had it not been for a 7.8 per cent increase in Greater Toronto, where new listings in January had dropped to the lowest level in more than three years. The rise in new listings in Greater Toronto was offset by monthly declines in new listings in Greater Vancouver and Edmonton.

With sales and new listings having both edged slightly higher in February, the national sales-to-new listings ratio was 52.1 per cent – virtually unchanged from 52.3 per cent in January. Since early 2010, the ratio has remained firmly entrenched within the range from 40 to 60 per cent that marks balanced territory. Just under two-thirds of all local markets posted a sales-to-new listings ratio in this range in February.

The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 6.4 months of inventory at the national level at the end of February 2014, down slightly from 6.5 months at the end of January. As with the sales-to-new listings ratio, the months of inventory measure continues to point to a well-balanced housing market at the national level.

The actual (not seasonally adjusted) national average price for homes sold in February 2014 was $406,372, an increase of 10.1 per cent from the same month last year.

The size of year-over-year average price gains continues to reflect the decline in sales activity in February of last year among some of Canada’s most active and expensive markets, which dropped the national average at that time.

This phenomenon was particularly clear this month, with Greater Vancouver having posted the biggest year-over-year increase in activity by a large margin.

The MLS® Home Price Index (MLS® HPI) provides a better gauge of price trends because it is not affected by changes in the mix of sales activity the way that average price is.

The Aggregate Composite MLS® HPI rose 5.05 per cent on a year-over-year basis in February 2014, up from a 4.83 per cent gain in January. Year-over-year price growth picked up among all property types tracked by the index.

Year-over-year price gains were led by two-storey single family homes (+5.84 per cent) and one-storey single family homes (+5.40 per cent). This was closely followed by price increases for townhouse/row units (+4.05 per cent) and apartment units (+3.74 per cent).

Year-over-year price growth in the MLS® HPI varied among housing markets tracked by the index, with the biggest gains again having been posted by Calgary (+9.10 per cent) and Greater Toronto (+7.28 per cent).

Greater Vancouver’s MLS® HPI recorded a fourth consecutive year-over-year increase (+3.17 per cent). While prices in Victoria remained lower than year-ago levels, February’s decline (-1.01 per cent) was the smallest in more than three years.

1 All figures in this release except average price are seasonally adjusted. Removing normal seasonal variations enables meaningful analysis of monthly changes and fundamental trends.

PLEASE NOTE:

The information contained in this news release combines both major market and national MLS® sales information from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 109,000 REALTORS® working through some 95 real estate Boards and Associations.