House sales, housing starts, and building permit details have been released for April and May 2019. These reports are cumulatively showing slight improvement in the Canadian housing market.

Statistics Canada said that the value of Canadian building permits jumped by 14.7% in April from March. This was the largest increase since May 2007, due to permits being issued ahead of planned development cost increases in Metro Vancouver. 

Canada Mortgage and Housing Corp. reported that the pace of housing starts slowed in May. The housing agency say the seasonally adjusted annual rate of housing starts slipped to 202,337 units in May, down 13.3% from 233,410 units in April. 

The Canadian Real Estate Association (CREA) reported that home sales in May were up 6.7% compared to last year, which is the largest year-over-year increase since 2016. This has lead CREA to upgrade its forecast for 2019 home sales. The CREA is now projecting that home sales will edge up 1.2% from last year compared with the previous forecast of a decline of 1.6% this year. 

“Defying the gloom-and-doomers, the Canadian housing market is gradually regaining strength, powered by falling long-term interest rates and the fastest population gains in a generation,” Bank of Montreal chief economist Doug Porter wrote in a report. The improvement in sales was driven by the Greater Toronto Area, which accounted for close to half of the overall increase.

The national average price for a home sold in May was close to $508,000, up 1.8% from a year ago. Excluding the Greater Vancouver and Greater Toronto Area, two of the country’s most expensive markets, the average price was slightly less than $397,000.

Sales have improved in recent months as mortgage rates have trended lower and the economy shows signs of rebounding after the weakness at the end of 2018 and the start of 2019. TD Bank economist Rishi Sondhi said that markets have also had additional time to adjust to federal and provincial policy measures, which weighed significantly on activity last year.

CREA also pointed to several changes in the federal budget this year to help potential buyers. The spring budget raised the maximum individual RRSP withdrawal limit under the home-buyers’ plan and announced plans for a new shared equity program to help first time buyers.

However, CREA said the overall level of sales is expected to remain below where it was in recent years and noted that the outlook for 2019 is below the 10-year average and well short of the record set in 2016, when almost 540,000 homes were sold.

The national average price is forecast to edge down 0.6% to around $485,000 this year following a 4.1% in 2018. CREA predicts home sales will rise 4.4% in 2020 to 483,200, while the national average price is seen rising by 0.9% to around $490,000 next year.

Source: CTV News
Source: Reuters
Source: Globe & Mail