Home sales fall once again
National home sales fell 6.7% in June, the largest month-over-month drop since June 2010.
That decline was influenced by cooled demand in the Greater Golden Horseshoe Area following Ontario’s unveiling of its Fair Housing Plan, according to the Canadian Real Estate Association.
“Changes to Ontario housing policy made in late April have clearly prompted many homebuyers in the Greater Golden Horseshoe region to take a step back and assess how the housing market absorbs the changes,” said Gregory Klump, CREA’s Chief Economist. “The recent increase in interest rates could reinforce a lack of urgency to purchase or, alternatively, move some buyers off the sidelines before their pre-approved mortgage rate expires. In the meantime, some move-up buyers who previously purchased a home before first selling may become more motivated to reduce their asking price rather than carry two mortgages.”
The average home price increased 0.4% year-over-year last month to $504,458.
New listings, meanwhile, were down 1.5% in June – due in large part to pullbacks in the Greater Toronto Area.
Nationally, the market is considered balanced, with a sales-to-new listings ratio of 52.8%.
CREA suggests new housing demand will be negatively impacted by last week’s rate decision, when the Bank of Canada increased its benchmark rate to 0.75%.
“Canadian economic and job growth have been improving, which is good news for housing demand,” CREA President Andrew Peck said. “However, it also means that interest rates have begun to rise, which may impact homebuyer confidence – particularly in pricier markets like Toronto and Vancouver where recent housing policies had already moved potential buyers to the sidelines.
“In lower priced markets, the effect of higher interest rates on housing affordability will be relatively muted.”
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