OTTAWA, Feb 6 (Reuters) - Home sales in Toronto fell 22 percent in January from a year earlier as rising interest rates and tighter mortgage rules weighed on demand, but prices have stabilized as stubborn sellers and tight supply kept the correction in check.
While sales were sharply lower than the record levels notched at the start of 2017, the nine-month old housing slump in Canada’s largest city has slowed, with rising condominium prices taking some sting out of the overall price decline.
According to a report from the Toronto Real Estate Board, the average price for a Toronto home was 4.1 percent lower than in January 2017, as a 9.1 percent drop in the price of a detached home was partly offset by a 14.6 percent increase in the average price of a condo.
The average price of Toronto homes was C$736,783 ($589,002) in January, little changed from C$735,088 in December, and 19.8 percent lower than the market peak in April 2017.
The real estate board said sales of detached homes fell 26.0 percent in January, while condo sales were down 21.9 percent, semi-detached home sales fell 13.1 percent and townhome sales fell 12.6 percent from a year earlier.
Toronto’s housing market swooned in May 2017 after the provincial government stepped in with a foreign buyers tax, among other measures, amid fears of a housing bubble.
While the market regained some strength late in 2017 as buyers pushed ahead with deals before tougher mortgage rules took effect on Jan. 1, realtors are braced for a quiet start to 2018 as buyers and sellers alike wait to see whether the long housing boom can struggle back to life.
A suite of so-called B-20 rules on mortgage lending that require stress tests on uninsured mortgages took effect Jan. 1, and are expected to make it harder for many buyers to qualify for a mortgage.
The group’s home price index, preferred by analysts because it smoothes out the composition of sales, was up 5.2 percent year-over-year, TREB said.
$1 = 1.2509 Canadian dollars Reporting by Andrea Hopkins; Editing by Sandra Maler