The global economic turmoil that roiled stock markets around the world in August left no discernable trace on the Canadian housing market, according to figures from the body that represents the bulk of the country's real estate agents.
The Canadian Real Estate Association's August resale housing report showed sales of existing homes held steady from July and posted a significant gain from year-earlier levels.
The number of newly-listed homes also remained steady, CREA said, adding the number of balanced local real estate markets is currently the highest on record. Housing prices rose 7.7 per cent year-over-year to $349,916.
Robert Kavcic, economist with BMO Capital Markets, said the stability of the real estate market is particularly striking in light of the wild volatility that dominated August trading.
Acrimonious negotiations in the United States over the country's national debt, as well as fears of an economic meltdown in cash-strapped European countries, led to dramatic swings on most international markets including the Toronto Stock Exchange. The TSX slipped below 12,000 points at one point during the month, only to rebound by 1,100 points by month's end.
“The one thing that continues to surprise us is how steady the Canadian housing market has been,” Mr. Kavcic said in a telephone interview.
“Granted, sales were down a little bit in August, seasonally adjusted, but I would say that's hardly disappointing given all the other turmoil we're seeing in financial markets obviously slowing global growth.”
Mr. Kavcic said rock-bottom interest rates, combined with strong national job growth throughout the year, have helped to sustain real estate market performance. It's an assessment shared by CREA chief economist Gregory Klump, who noted that economic and financial market turmoil outside Canada have been keeping interest rates lower.
“Those headwinds will likely persist until, and indeed after, fiscal quagmires in the U.S. and Europe are resolved,” Mr. Klump said in the report. “In the meantime, the Bank of Canada will have ample reason to delay raising interest rates further, which is supportive for the Canadian housing market.”
CREA said actual sales — meaning not seasonally adjusted — came in 15.8 per cent above national levels last year.
“This was the largest year-over-year increase since last April, but largely reflects weakened activity one year ago,” CREA said.
A total of 324,030 homes have traded hands via the association's Multiple Listing Service system so far this year.
“While this stands only marginally above levels in the first eight months of 2010 it nevertheless marks the first time in 2011 that year-to-date activity has pulled ahead of year-earlier levels,” it said.
The national sales to new listings ratio, a measure of market balance, stood at 51.6 per cent in August, unchanged compared with July.
That meant the resale housing inventory, a figure based on the number of months it would take to sell all those homes at current activity levels, stood at 6.2 months at the end of August on a national basis. That was little changed from 6.1 months at the end of July, a figure that has remained relatively stable since April.
The August figures exceeded most analyst expectations, Mr. Kavcic said, adding economists had projected sales growth of 16 per cent year over year and a price increase of seven per cent.
In that sense, the august figures are in line with a pattern of surprisingly strong performance for the entire year, he said.
“Coming into the year, I think expectations were quite a lot lower than what we're seeing as far as overall performance, sales growth or price performance.”
Last month, CREA revised its 2011 resale projections upward, predicting sales would grow slightly less than one per cent from levels posted the year before. The modest anticipated growth is nonetheless a reversal from earlier projections, which called for sales to dip one per cent in 2011.