Canadian home prices rose in June from May, pushing prices just barely above their 2017 peak, while new home prices were flat again in May, according to separate reports on Thursday that signaled a housing market swoon may be stabilizing.
The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices increased 0.9 per cent on a monthly basis as prices rose in 10 of the 11 markets surveyed.
“Does this mean that the Canadian home resale market is about to enter into a new frenzy? No. June’s rise in the index, impressive at first sight, was in fact weak for this time of the year .... apart from seasonal patterns, the index merely stabilized lately,” Marc Pinsonneault, economist at National Bank, wrote in a research note.
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June’s gain was the third-smallest gain in the traditionally strong month in the last 14 years, Teranet noted.
Canada’s once-hot housing market has softened in the wake of rule changes that tightened mortgage lending, a foreign buyers tax, and four interest rate hikes by the Bank of Canada since July 2017, though the condo markets in both Toronto and Vancouver have remained robust.
The central bank said on Wednesday housing markets may have begun to stabilize after a weak start to 2018.
Price gains continued to decelerate on an annual basis, up 2.9 per cent from June 2017.
“The latest run of monthly increases is merely a recovery of ground lost in the second half of last year,” Teranet said in the report.
Prices in Toronto were up 1.2 per cent on a monthly basis but still down 4.8 per cent from its peak in July 2017, Teranet said.
Vancouver prices gained 0.6 per cent, taking the index to a new record.
The report showed the condo market continued to lead Toronto and Vancouver price gains, as tighter mortgage rules have priced many buyers out of more expensive single-family homes.
A separate report from Statistics Canada showed new home prices were unchanged in May for a third straight month, with Toronto and Vancouver both flat.
Prices were unchanged or declined in 15 of the 27 metropolitan areas surveyed.
Compared to a year ago, new house prices were up 0.9 per cent in May, the smallest increase since February 2010.
The new housing price index excludes apartments and condominiums, which have seen robust sales in big cities and account for one-third of new housing.