TORONTO (Reuters) – Re-sales of Canadian homes rose 4.1 percent in June from the previous month, the Canadian Real Estate Association said on Monday, as the impact on buyers of tougher mortgage rules eased.
The industry group said actual sales, not seasonally adjusted, fell 10.7 percent from a year earlier to a five-year low. The group’s Home Price Index was up 0.9 percent from June 2017.
Canada’s housing market, which had cooled in the last year in response to rising interest rates and tighter mortgage rules – dubbed a stress-test – is showing some signs of starting to take the restrictions in stride.
A year ago, housing sales and prices were at or near record levels in many parts of Canada, but a series of regulatory changes, taxes on foreign buyers, tighter mortgage rules and rising interest rates have since reined in demand.
Despite the improvement, sales activity remains below the 10-year monthly average, and rising mortgage rates are expected to keep a lid on activity and price gains, Gregory Klump, CREA’s chief economist, said in a statement on the group’s website.
“The number of homes trading hands has a long way to go before it returns to levels posted in recent years,” Klump said.
The number of newly listed homes fell 1.8 percent in June and remained below levels for the month in past years. With new listings down and sales up, the national sales-to-new listings ratio rose to 54.3 percent in June from 51.2 percent in May. A ratio between 40 and 60 is considered balanced, and the long-term average is 53.4 percent.
There were 5.4 months of inventory on a national basis at the end of June, down from May’s three-year high and compared with the long-term average of 5.2 years, CREA said.
The average price for homes sold in June, not seasonally adjusted, fell 1.3 percent from a year earlier to just under C$496,000 ($377,473.36).
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