Statistics released on May 15, 2019 by the Canadian Real Estate Association (CREA) show national home sales climbed in April 2019.

Highlights:

  • National home sales improved by 3.6% month-over-month in April.
  • Actual (not seasonally adjusted) activity was up 4.2% year-over-year.
  • The number of newly listed homes climbed 2.7% month-over-month.
  • The MLS® Home Price Index (HPI) eased by 0.3% year-over-year in April.
  • The national average sale price edged up 0.3% ear-over-year.
  • Both single-detached and multi-family starts were higher during April, although the gain was much stronger for the latter.
  • Single-detached starts rose 6% to 56k units, building on March’s gain.
  • Construction of multi-family units jumped 29% (+40k) to 179.5 units in April.
  • Homebuilding was higher in seven of ten provinces.

Home sales recorded via Canadian MLS® Systems rose by 3.6% year-over-year in April 2019. After having dropped in February to the lowest level since 2012, the rebound in sales over the past two months still leaves activity slightly below readings posted over most of the second half of 2018.

April sales were up in about 60% of all local markets, with the Greater Toronto Area (GTA) accounting for over half of the national gain.

Actual (not seasonally adjusted) sales activity was up 4.2% year-over-year in April (albeit from a seven-year low for the month in 2018), the first year-over-year gain since December 2017 and the largest in more than two years. The increase reflects gains in the GTA and Montreal that outweighed declines in the B.C. Lower Mainland.

“Sales activity is stabilizing among Canada’s five most active urban housing markets,” said Gregory Klump, CREA’s Chief Economist. “That list no longer includes Greater Vancouver, which fell out of the top-five list for the first time since the recession and is well into buyers’ market territory. Sales there are still trending lower as buyers adjust to a cocktail of housing affordability challenges, reduced access to financing due to the mortgage stress-test and housing policy changes implemented by British Columbia’s provincial government,” said Klump.

The number of newly listed homes rose 2.7% in April, building on March’s 3.4% increase. New supply rose in about 60% of all local markets, led by the GTA and Ottawa.

With sales up by more than new listings in April, the national sales-to-new listings ratio tightened marginally to 54.8% from 54.3% in March. This measure of market balance has remained close to its long-term average of 53.5% since early 2018.

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

There were 5.3 months of inventory on a national basis at the end of April 2019, down from 5.6 and 5.5 months in February and March respectively and in line with the long-term average for this measure.

Housing market balance varies significantly by region. The number of months of inventory has swollen far beyond long-term averages in Prairie provinces and Newfoundland & Labrador, giving homebuyers there ample choice. By contrast, the measure remains well below long-term averages in Ontario and Maritime provinces, resulting in increased competition among buyers for listings and fertile ground for price gains.

The Aggregate Composite MLS® Home Price Index (MLS® HPI) appears to be stabilizing, having edged lower by 0.3% y-o-y in April 2019.

Among benchmark property categories tracked by the index, apartment units were again the only one to post a year-over-year price gain in April 2019 (0.5%), while two-storey single-family home and townhouse/row unit prices were little changed from April 2018 (-0.3% and -0.2%, respectively). By comparison, one-storey single-family home prices were down by -1.4% year-over-year.

The actual (not seasonally adjusted) national average price for homes sold in April 2019 was close to $495,000, up 0.3% from the same month in 2018.

The national average price is heavily skewed by sales in the GVA and GTA, two of Canada’s most expensive housing markets. Excluding these two markets from calculations cuts almost $104,000 from the national average price, trimming it to just over $391,000.

Building Permits
Statistics Canada released information about building permits issued in March 2019. Canadian municipalities issued $8.1 billion worth of building permits in March, up 2.1% from February. Four provinces reported increases in March, led by British Columbia with an increase of 12.8% (+$180 million). Meanwhile, all provinces east of Manitoba reported declines.

Municipalities issued $4.8 billion worth of residential permits in March, down 1.5% from February. The decline was largely attributable to lower construction intentions in Ontario (-$102 million) and Quebec (-$99 million). The value of single-family dwelling permits was down 5.0% (-$108 million) from the previous month. However, consistent with CREA reports, the value of multi-family dwelling permits increased 1.3% (+$37 million) in March.

Housing Starts
TD Bank reported a healthy jump in Canadian housing starts which blew away expectations, jumping to 23% m/m to 235.5k (annualized) units in April from an unrevised 192.5k units in March. On a six month moving average basis, starts ticked higher to 206.1k units from 202,4k units in March.

Both single-detached and multi-family starts were higher during April, although the gain was much stronger for the latter. Single-detached starts rose 6% to 56k units, building on March’s gain. Meanwhile, construction of multi-family units jumped 29% (+40k) to 179.5 units in April.

Homebuilding was higher in seven of ten provinces.

  • Ontario accounted for the majority of the national gain, with starts rising by 26.7k to 87.7k units. The bulk of Ontario’s increase came outside of Toronto, where starts increased by 5.9k to 38k units.
  • In the Prairies, homebuilding picked up in Alberta (+6.2k to 26.0k units) and Manitoba (+0.7k to 6.6k units) while dipping slightly in Saskatchewan (-0.1k to 1.8k units). Despite gains in Alberta and Manitoba in April, homebuilding remains soft in the Prairies, weighed on by soft economic conditions and inventory overhang.
  • Starts eased in slightly in Quebec (-6.0k units to 54.9k) after surging to their highest level since 2012 in March.
  • Starts increased in B.C. (+15.7k to 51.1k units), buoyed by a 13.0k gain in multi-family starts in Vancouver.
  • Starts were up modestly in the Atlantic Region (+0.3k to 7.4k units for the Region overall) , as gains in New Brunswick, PEI and Newfoundland and Labrador offset a drop in Nova Scotia.

Although home building has slowed from last year’s robust pace. April’s increase in homebuilding bodes well for residential investment and overall economic growth in Q2.

Source: Canadian Real Estate Association
Source: TD Bank
Source: Statistics Canada