Canadian housing sales set fresh records in the third quarter, but a dearth of new listings threatens to push prices substantially higher and price many buyers out of the market.
"Listings have really gone down," said Wayne Hartley, a realtor at Sudbury Achievers Realty Inc. "At the higher end of the market things have really tailed off, you just can't find anything for sale. So if they list, they go fast for pretty good prices."
The Canadian Real Estate Association said Thursday 135,182 homes were sold from July to September, an increase of 18 per cent from last year and the most ever sold in the third quarter. Average prices gained 11 per cent to $327,736.
"It is perhaps not a surprise that with demand up and supply down, the differential has resulted in a price squeeze," said Eric Lascelles, chief economics and rates strategist at TD Securities. "The new level of prices is a record high, meaning that all of the earlier declines have been fully unwound."
While sales were up, new listings took a 17 per cent fall from the same time last year on a national basis. Homes have become particularly hard to find in Saskatchewan, with new listings down 37.5 per cent in Saskatoon and 28.3 per cent in Regina.
"We've seen a shift toward a sellers market, that's for sure," said Sinda Shaw, a realtor at Sutton Group Norland Realty in Saskatoon. "So for people who were able to hold off on selling in a down market, things look good. For those who want to buy now, maybe the cycle is shifting and it's a little less favourable for them."
The lack of listings has created a sellers market, with homes being sold as quickly as they are listed in most markets across the country. That could change, however, as more sellers are drawn in by the allure of higher prices.
"Headline average price increases over the rest of the year are expected to prompt sellers to return to the market after having retreated to the sidelines late last year and earlier this year," said CREA economist Gregory Klump.
On a seasonally adjusted basis, a method which tries to smooth out the data and take things such as seasons and one-time events into account, 127,941 homes were sold in the third quarter - an increase of 12 per cent for the previous quarter. The total value of sales also set a record in the third quarter, at $42.1-billion - an increase of 20 per cent from the third quarter last year.
"Momentum for sales activity remained strong throughout the third quarter," said Dale Ripplinger, the association's president. "Low interest rates, rebounding consumer confidence and an improving overall sense of economic security continue to draw home buyers to the housing market."
Meanwhile, sales continued to increase on a monthly basis in September, 1.5 per cent higher than in August at 42,958. The increase pulls the seasonally adjusted activity 63 per cent higher than the low hit in January.
The busiest markets year-over-year were Toronto and Vancouver, according to the real estate association, with the number of units changing hands up 28 per cent and 124 per cent respectively.
"The national average price continues to be skewed upward by a sustained increase in sales activity, including a sharp rebound in activity at the higher end of the price spectrum, in some of Canada's priciest markets," Mr. Ripplinger said.
Newfoundland and Labrador led the year-over-year price gainers, with prices increasing 14.5 per cent from last September. Greater Vancouver saw prices increase 14 per cent. Not all markets have fared that well. Halifax has seen the steepest drop with average prices fall 6.2 per cent, with Sudbury close behind with a decrease of 5.1 per cent.
"There is no denying that the Canadian housing market is revving up, and extremely low mortgage rates, attractive home prices, and pent-up demand have combined to supercharge the sector," Mr. Lascelles said.
"However, we feel obliged to note that not all aspects of the housing market are showing such strength. Recent strength has been more regional than nationwide, housing starts are still low, and new home prices are still generally declining."