There was a further increase in home sales nationwide in May, finally returning sales to 10-year average levels for the month.
The Canadian Real Estate Association reported a 1.9% month-over-month increase while actual seasonal activity gained 6.7% year-over-year; the largest annual gain in three years.
Sales only increased in half of local markets in May but were led by gains in Greater Vancouver and Greater Toronto areas. Year-over-year, around two-thirds of local markets gained but close to half of the overall increase was down to increased sales in the GTA.
"The mortgage stress-test continues to present challenges for home buyers in housing markets where they have plenty of homes to choose from but are forced by the test to save up a bigger down payment," said Gregory Klump, CREA's Chief Economist. "Hopefully the stress-test can be fine tuned to enable home buyers to qualify for mortgage financing sooner without causing prices to shoot up."
Listings down slightly
The number of new homes listed in May was slightly lower than in April with a 1.2% decrease and with the rising sales that took the national sales-to-new listings ratio to 57.4% from 55.7% in April.
Based on a comparison of the sales-to-new listings ratio with the long-term average (53.5%), almost three-quarters of all local markets were in balanced market territory in May 2019.
There were 5.1 months of supply in May, down from 5.3 in April.
The actual (not seasonally adjusted) Aggregate Composite MLS® Home Price Index (MLS® HPI) edged down by -0.6% y-o-y in May 2019, the largest decline in almost a decade.
Regional price data
Trends continue to vary widely among the 18 housing markets tracked by the MLS® HPI.
Results remain mixed in British Columbia, with prices down on a y-o-y basis in the GVA (-8.9%), the Fraser Valley (-5.9%) and the Okanagan Valley (-0.7%). Meanwhile, prices edged up 1% in Victoria and climbed 4.7% elsewhere on Vancouver Island.
Among Greater Golden Horseshoe housing markets tracked by the index, MLS® HPI benchmark home prices were up from year-ago levels in Guelph (+5.7%), the Niagara Region (+5.4%), Hamilton-Burlington (+3.4%), Oakville-Milton (+3.4%) and the GTA (+3.1%). By contrast, home prices in Barrie and District held below year-ago levels (-6.1%).
Across the Prairies, supply remains historically elevated relative to sales and home prices remain below year-ago levels. Benchmark prices were down by 4.3% in Calgary, 3.6% in Edmonton, 3.9% in Regina and 1.3% in Saskatoon. The home pricing environment will likely remain weak in these cities until demand and supply return to better balance.
Home prices rose 8% y-o-y in Ottawa (led by a 12.2% increase in townhouse/row unit prices), 6.3% in Greater Montreal(led by a 7.6% increase in apartment unit prices), and 2% in Greater Moncton (led by a 15.9% increase in apartment unit prices).
The MLS® HPI provides the best way to gauge price trends, as averages are strongly distorted by changes in the mix of sales activity from one month to the next.
The actual (not seasonally adjusted) national average price for homes sold in May 2019 was close to $508,000, up 1.8% from the same month in 2018.
The national average price is heavily skewed by sales in the GVA and GTA, two of Canada's most active and expensive housing markets. Excluding these two markets from calculations cuts almost $111,000 from the national average price, trimming it to just under $397,000.