(Corrects time frame in 3rd paragraph to June and July, from
By Andrea Hopkins
TORONTO Nov 15 Sales of existing homes in
Canada declined in October from September, suggesting the summer
surge in sales was boosted by homebuyers who jumped into the
market amid the threat of rising mortgage rates, dampening
demand as the year draws to a close.
The Canadian Real Estate Association said on Friday sales
activity was down 3.2 percent last month from September, ending
a string of monthly gains that began in the spring.
The industry group for Canadian real estate agents said
October's decline returned activity to near where it stood in
June and July.
"While the decline in new listings points to waning
momentum, one off month for sales does not make a trend as the
substantial decline in October appears to be payback from
earlier in the summer when sales activity was brought forward to
lock in mortgages before further increases," Mazen Issa, Canada
macro strategist at TD Securities, said in a research note.
"As such, we are inclined to look through the weakness of
this report and focus on the longer term trend where we see the
theme of stabilization in the housing market carry the day."
The housing sector has been a major driver of Canadian
economic growth coming out of the recession, but the market has
been plagued by worries it has over-extended itself and is due
for a correction.
Concerned about high levels of household debt, the
government tightened credit rules four times since the financial
crisis. After the latest intervention, in July 2012, the
property market cooled markedly. But the market bounced back
this spring, with many buyers making purchases ahead of an
expected increase in borrowing costs.
Mortgage rates ticked higher as summer drew to a close, but
the Bank of Canada has since indicated it is not in a hurry to
raise official interest rates, soothing potential homebuyers who
can now take their time as they search for a property.
"Now that interest rates appear to be going nowhere fast,
sales activity in the near term may be held in check by
homebuyers who are in less of a hurry to purchase," Gregory
Klump, CREA's chief economist, said in the report.
The market remains well above last year's depressed levels.
October's actual sales activity was up 8.3 percent compared to
October 2012 on a non-adjusted basis.
CREA's home price index rose 3.5 percent from October last
year. The actual national average price for homes sold in
October 2013 was C$391,820 ($373,100), an increase of 8.5
percent from the same month last year.
Sales were down in a little over half of all local markets,
including Vancouver, Toronto, Hamilton-Burlington, and Montreal.
The monthly decline in activity among these markets offset
increased activity in a handful of less active major urban
centers, CREA said.
Despite considerable monthly sales volatility in recent
years, the group noted that annual sales remain remarkably
stable. With just two lower volume months left to go this year,
sales for the year-to-date in October stand broadly in line with
activity over the same period in each of the past five years and
well off the peak reached in 2007, it said.
($1 = 1.0503 Canadian dollars)
(Reporting by Andrea Hopkins; Editing by James Dalgleish and