* Sales down 0.5 month/month, 17.4 pct lower than
* Prices edge higher, but gains continue to slow
* Impact of tighter mortgage rules will lesson, economist
By Andrea Hopkins
TORONTO, Jan 15 Sales of existing homes in
Canada fell in December from November and year-over year sales
tumbled, the Canadian Real Estate Association said on Tuesday,
further evidence Canada's once-hot housing market has slumped.
CREA, the industry group for Canadian real estate agents,
said in a report that sales activity was down 0.5 percent in
December from November, the third consecutive monthly decline.
Actual sales for December, not seasonally adjusted, were off
17.4 percent from a year earlier, the largest drop since tighter
mortgage lending rules went into effect last July.
The federal government tightened the rules after roaring
sales since 2009 and historic levels of household debt sparked
fears of a bubble. Sales have since slumped and economists are
divided over whether there will be a U.S.-style housing crash or
a soft landing of slower sales and gradually declining prices.
"With the whopping 17.4 percent year-over-year change in
sales seen in December, we suspect that the impacts from the
mortgage rule tightening in July are now fully priced in," Sonya
Gulati, senior economist at TD Economics, wrote in a research
"We expect the Canadian housing market to stabilize at
current levels over the next few months. When looking at
previous mortgage rule tightening episodes, the housing market
impacts have been temporary in nature. There is no reason to
think that this time will be any different."
CREA's Home Price Index rose 3.3 percent in December from a
year earlier, the smallest gain since April 2011. This marks the
eighth time in as many months that the year-over-year gain
CREA said sales were handicapped by December's five full
weekends, since far fewer deals happen on Saturday and Sunday.
The group said new listings have fallen as sellers with no
pressure to sell take homes off the market if they cannot get
the asking price.
"In the absence of economic stresses like a spike in
interest rates or a sharp drop in employment, this dynamic can
be expected to keep the housing market in balance," CREA Chief
Economist Gregory Klump said in the report.
The number of newly listed homes fell 1.3 percent month over
month in December. Combined with monthly declines of 1.1 percent
in November and 4.1 percent in October, new supply reached its
lowest level since March 2011, CREA said.