Canadian Existing Home Sales (September 2018)

Rishi Sondhi, Economist | 416-983-8806

Date Published: October 15, 2018

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Existing home sales eased in September

  • Existing home sales dipped 0.4% month-on-month in September, breaking the string of monthly advances in place since May. Sales were lower in slightly more than half of all local markets in September, with significant drops in Vancouver Island (-7.5%), Edmonton (-3.0%), and Oakville-Milton (-10.3%). 
  • Despite falling in Vancouver (-1.5%), sales were flat in B.C. overall, with gains in Fraser Valley (+8.0%), Okanagan-Mainline (+1.5%), and Victoria (+4.3%) providing an offset.
  • National new listings increased 3% in September, with big gains observed in the GTA (+5.2%), Vancouver (+4.4), and Fraser Valley (+13.6%).
  • With new listings rising and sales falling, the sales-to-new listings ratio eased to 54.4 in September – still firmly in balanced territory. The sales-to-new listings ratio is highest in Quebec (63.9), followed by Nova Scotia (59.2) and Ontario (57.1). On the opposite end of the spectrum, ratios were lowest in Saskatchewan (41.1), Alberta (46.4), and Newfoundland and Labrador (30.3) – pointing to weak near-term price growth in these markets. In B.C., the ratio dropped to 48.7 in September from 51.6 in August. 
  • The average home price rose for the sixth straight month in September (+0.6%), although it edged lower (-0.2%) on a year-over-year basis.  
  • The quality-adjusted MLS home price index was up 2.3% from a year-ago, in line with the gains observed in July and August. Quality-adjusted prices were higher in most markets, with tight conditions boosting prices in Ottawa (+6.9% y/y) and Montreal (6.1% y/y). In the GTA, prices were up on a year-over-year basis (+2.0%) for the second straight month. Meanwhile, in the GVA, price growth decelerated to 2.2% y/y in September – its softest pace since 2013. In Fraser Valley, prices were up 8.5% - still a strong increase, though the first single-digit advance since 2015.

Key Implications

  • Although sales dipped in September, there were bound to be some setbacks on the road to recovery. The broad picture of improvement from earlier B-20 induced weakness remains intact.
  •  ooking at the past few months, sales posted relatively solid gains in June and July, driven by a rush of pent-up demand as markets adjusted to the updated B-20 lending guidelines. However, activity has eased considerably since then. This is consistent with our forecast calling for resale activity to rise at a more moderate pace in coming quarters, as increasing borrowing costs and stretched affordability conditions in key markets keep a lid on demand.
  • Since April, activity has improved in most provinces. B.C. provides a notable exception, as markets are dealing with provincial measures, on top of the B-20 lending rule changes and rising borrowing costs. With ample supply relative to demand, B.C. home prices are likely to post subdued growth in the fourth quarter, compared to a relatively stronger gain expected for Canada overall.