Canadian Existing Home Sales (February 2019)

Brian DePratto, Senior Economist | 416-944-5069

Date Published: March 15, 2019

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A weak February for existing home sales 

  • Sales of existing homes fell 9.1% month-on-month in February. Even with January's unrevised 3.6% climb, the number of transactions fell to levels last seen in 2012. 
  • Among the major markets, sales were down in Greater Vancouver (-4.4%), Greater Toronto (-12.6%), and Calgary (-2.3%). Most provinces reported softer sales, with particular weakness in Ontario (-14.4%). One notable exception was Quebec, where sales were up 12% in a second month of double-digit growth in activity.   
  • New listings fell by 3.2%, led largely by the Western provinces. New listings were effectively flat in Ontario (-1%) and Quebec (+0.6%). 
  • This left the Canadian sales-to-new listings ratio down three points at 54.1, still in balanced territory. The combination of sales and listings activity left this measure unchanged in most provinces. A roughly seven point drop in Ontario (to 54.9) drove the national figure. 
  • The average sale price fell for a fifth straight month, down 1.8% in February. This was largely a function of B.C., where the average price fell 2.6%. Prices were flat to up elsewhere.
  • The quality adjusted MLS home price index dropped into negative territory, down 0.1% year-on-year – the first decline since 2009. The softness again appears to be a function of markets in B.C. (the Lower Mainland index fell 5.0% in its 3rd monthly drop), as well as oil-producing regions, which have been in negative territory for more than a year now.

Key Implications

  • That could have been better. The February resale report disappointed along most metrics. As always there was no single story, with some markets remaining solid, notably Quebec. However, Vancouver, Toronto, and the Prairie markets all stood out as still struggling to find their footing. 
  • Still, a grain of salt is needed. February saw severe winter weather in both Toronto and Vancouver that may have played a role in keeping potential buyers and sellers on the sidelines. The true test of market health will come with the warmer Spring weather. 
  • This soft report will act as another contributor to a weak start for 2019, as outlined in our latest Quarterly Economic Forecast. Mixed indicators to date for construction and renovation activity, together with today's data suggest that residential investment will likely drag on growth for a third quarter in a row.   
  • Looking past near-term movements, there remain fundamental supports for housing markets. Population growth remains robust, and we expect no further Bank of Canada rate hikes, providing a more supportive environment for buyers than previously anticipated. If rumours of policy changes to support first time homebuyers in next week's federal budget are true, the potential buyer pool would likely be expanded further. Resale housing markets may be down, but it is too early to count them out.