Residential property sales in Canada fell 4.5% from December last year to January 2012, the biggest monthly fall since July 2010, the latest figures from the Canadian Real Estate Association (CREA) show.
It was also the first monthly fall since August 2011. The monthly decline reversed a string of monthly increases over the closing months of last year, and returned national activity to where it stood at the end of the third quarter of 2011.
Last year was also muted in terms of price increases, with the national average home price up less than 2% year on year in January, one of the smallest increases of the last 12 months.
The actual (not seasonally adjusted) national average price for homes sold in January 2012 was $348,178, representing an increase of 1.2%from its year ago level. This ranks among the smallest increases since late 2010.
On a seasonally adjusted basis, the national average home price rose 1.6% on a month on month basis, marking a rebound from a decline of similar magnitude in December.
‘The national housing market is stabilizing and remains well balanced. That said, forecasts for economic and job growth going forward vary widely for different parts of the country, suggesting a possible continuation of a softening trend in some markets, as well as the potential that demand will pick up based on strong fundamentals in others,’ said Gary Morse, CREA’s president.
Activity was down in over half of all local markets in January from the previous month. Led by declines in Greater Toronto and Montréal, demand also softened in a number of other major urban centres including the Fraser Valley, Calgary, Edmonton, Winnipeg, Ottawa, and Greater Vancouver.
Actual (not seasonally adjusted) national sales activity was up 4% from year ago levels in January, the smallest year on year increase since last May. As was the case in a number of months last year, actual sales in January 2012 stood close to the five and 10 year average for the month.
The number of newly listed homes edged down 1.4% on a month on month basis in January following a 2.9% increase in December. The monthly decline in new supply reflects a drop in new listings in a number of Canada’s largest urban centres, which offset a jump in new listings in Vancouver, CREA said.
Sales fell in January shifting the national market back towards the mid point of balanced territory and reversing the recent trend which had seen the market becoming tighter over the final four months of 2011. The national sales t -new listings ratio, a measure of market balance, stood at 53.8% in January, down from 55.5% in December and 55.4% in November.
Based on a sales to new listings ratio of between 40 to 60%, some 60% of local markets were balanced in January. Compared to December, there were fewer buyers’ and sellers’ markets, and a greater number of balanced markets.
The number of months of inventory stood at six months at the end of January on a national basis, up from 5.7 months in December 2011 and returning it to where it stood in October 2011. The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is another measure of the balance between housing supply and demand.
‘Year on year comparisons in the national average price are expected to become volatile and may turn negative, reflecting average price developments in the first half of 2011 in Vancouver,’ said Gregory Klump, CREA’s chief economist.
‘At that time, high end home sales in Vancouver’s priciest neighbourhoods surged to all-time record levels, which skewed the national average price upward considerably. A replay of this phenomenon is not expected this year,’ he explained.
‘As a result, comparisons for national average price to year ago levels over the coming months will reflect an upwardly skewed base effect. For this reason, year on year comparisons should be kept in perspective. Developments in the MLS® HPI will provide important guidance on price trends, since it is not affected by the problem of compositional shifts in the mix of sales activity,’ he added.