Rebound in Toronto and Vancouver push Canadian home sales higher
Canadian home sales picked up in November as a rebound in Toronto and Vancouver offset weakness in Calgary.
Home sales rose 0.6% nationally from October, marking the ninth straight month of increases, the Canadian Real Estate Association reported Monday. Benchmark prices climbed 0.8% on the month.
Toronto sales rebounded from October's dip, rising 1.6% in November while Vancouver continued its momentum, increasing 5.2%. Transactions in Calgary fell 8.1%, as an oversupply of homes in the prairie provinces favors buyers. The Ottawa market shrank by 1.3% while Montreal ticked up 0.5%.
Residential housing has recovered this year from a dismal 2018 as borrowing costs remain low and buyers adjust to tighter mortgage rules. Prices look set to increase, with 4.2 months of inventory on a national basis the tightest since 2007 and below the long-term average of 5.3 months.
"We look for rising sales in 2020, consistent with job growth, population gains and a mild boost from government programs for first-time homebuyers," Rishi Sondhi, an economist at Toronto-Dominion Bank, said in a note. "Of course, this view rests on financial conditions remaining accommodative."
The housing market is poised to improve going into 2020 with underlying economic fundamentals remaining strong, according to CREA, which revised its sales forecast upward for 2019 and 2020. The industry association now expects national homes sales to reach 486,800 units this year, reflecting stronger than anticipated activity in British Columbia, Ontario, Quebec and Nova Scotia. And in 2020, CREA expects sales to rise 8.9% to 530,000 units.
"Recent national sales trends have improved by more than expected over the second half of 2019 while new listings have fallen," CREA said in the report. "While sales are expected to trend higher, most of this annual increase in 2020 reflects a weak start to 2019 rather than a significant change in sales trends over the forecast horizon."
Benchmark prices also continued their recovery, rising 2.6% nationally from a year earlier to C$638,300 ($485,700). Though Vancouver, Calgary and other western cities have lower prices than a year ago, central Canadian markets are appreciating. Toronto's prices are up 6.5%, while Montreal's rose 8.7%. Prices in the capital city of Ottawa are up 11%.