Home sales up 13% in December from year ago, down for month

The number of existing homes that changed hands in Canada in December was nearly 13-per-cent higher than a year earlier, but slipped from the prior month for the third time in a row.

Sales over the Multiple Listing Service last month were 1.8-per-cent lower than in November on a seasonally-adjusted basis, according to the Canadian Real Estate Association, which represents the majority of real estate agents in Canada. They have been declining month-to-month since September.

But the 12.9-per-cent year-over-year increase exceeded expectations of some economists. Bank of Montreal’s Sal Guatieri had been looking for a 7-per-cent gain from December 2012. About 70 per cent of all Canadian markets had more sales last month than they had a year earlier, with the strongest gains coming from Vancouver, the Fraser Valley, Calgary, Edmonton, Toronto and the Hamilton-Burlington area.

The average price of homes that sold over the MLS, meanwhile, was up by 10.4 per cent from a year earlier to $389,119. Averages can be distorted by changes in the location or size of homes that are selling, and the real estate association says that most of the increase was driven by the rebounding markets of Vancouver and Toronto. When those two cities are removed, the average increased by only 4.6 per cent.

The MLS Home Price Index, which attempts to create a more apples-to-apples national comparison, was up 4.3 per cent. That’s a slight acceleration in price growth from the 4.11 per cent annual gain registered in November.

The number of homes that changed hands during all of 2013, at 457,893, was 0.8 per cent higher than in 2012. At the start of 2013, economists were expecting home sales to drop from the prior year, as the market was still in the midst of a slump that began after Finance Minister Jim Flaherty tightened mortgage insurance rules in the summer of 2012.

If the government doesn’t tighten rules further, then this year’s sales could surpass those of 2013, assuming demand holds steady and that a strengthening economy and job gains offset expected small increases in mortgage rates, said CREA’s chief economist Gregory Klump.

On a month-to-month basis, sales were down in about 60 per cent of local markets, including Calgary, Edmonton and Toronto, CREA said.

The number of new listings, which was down 4.3 per cent from November, fell further than sales, pushing the sales-to-new listings ratio to 55 per cent from 53.6 per cent.

“This indicates a slightly firmer housing market but remains well within balanced territory marked by the range from 40 to 60 per cent, as has been the case since early 2010,” CREA said.

TARA PERKINS - REAL ESTATE REPORTER

The Globe and Mail