* Sales dip in month, but well above year-ago levels
* Surge in summer, autumn demand deflate winter appetite
* Prices still rising; analysts see soft landing
By Andrea Hopkins
TORONTO, Dec 16 Sales of existing homes in
Canada dipped in November from October as a surge in autumn
sales spurred by rising mortgage rates abated, the Canadian Real
Estate Association said on Monday.
The industry group for Canadian real estate agents said
sales activity was down 0.1 percent last month from October.
While actual sales for November, not seasonally adjusted,
rose 5.9 percent from a year earlier, CREA said activity was
sharply lower than just two months earlier, when the prospect of
rising mortgage rates spurred home buying.
"National sales activity in November stood 3.4 percent below
the peak reached in September, providing further evidence that
activity in the later summer and early fall was likely boosted
by home buyers with pre-approved mortgages at lower than current
interest rates jumping into the market before their
pre-approvals expired," CREA said.
The prospect of rising mortgage rates typically steals
demand from the future, a drop now in evidence.
But economists said they expect some bounceback in activity
because bond yields, which set longer-term mortgage rates, have
eased, before the overall market manages a soft landing.
"We expect activity to grind higher in the months to come
following the recent decline in bond yields that will help to
restore a modest amount of affordability relative to the
summer," David Tulk, chief Canada macro strategist at TD
Securities, said in a research note.
"But taken in conjunction with the accumulated impact of
tighter mortgage regulations, higher yields expected over the
course of 2014 will limit the upside for the housing market.
Instead, we expect that the market is destined for a soft
landing and will have less of a role to play in supporting
economic growth in a recovery that will become more reliant on
Canada's housing market avoided the crash experienced in the
United States, due in part to more conservative lending
standards and a stronger economy. But economists have long
predicted a correction eventually in Canada, but were divided
over whether prices will drop sharply or simply stagnate in a
so-called "soft landing" scenario.
CREA said there were 6.0 months of inventory at the national
level at the end of November, unchanged from one month earlier.
The national sales-to-new listings ratio slipped to 53.4 percent
in November from 54.5 percent in October, well within what CREA
considers balanced territory.
The actual national average price for homes sold in November
2013 was C$391,085 ($368,500), an increase of 9.8 percent from
the same month last year.
CREA's home price index rose 4.1 percent from November last
year. The index is considered a better gauge of price trends
because it is not affected by changes in the mix of sales
activity, softening the impact of changes in big expensive