Canada's two most expensive housing markets have moved in different directions over the past year, leaving average national sales with an appearance of relative stability that masks sharp regional differences.
Greater Toronto Area home sales fell 27 per cent in October compared with a year earlier, while Greater Vancouver saw home sales climb 35 per cent in October on an annual basis, according to statistics released Wednesday by the Canadian Real Estate Association.
That wide gulf between the two cities meant home sales fell a modest 4.3 per cent in October on a national basis, marking the seventh consecutive month that sales have fallen in Canada.
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Sales fell in more than half of all local markets in Canada, "led overwhelmingly by the GTA and nearby cities," CREA said.
In addition to large sales declines in several cities surrounding Toronto, home sales also fell by more than 10 per cent in October in Victoria, Calgary and Winnipeg compared with a year earlier, CREA said.
On a national basis, prices also showed virtually no change in October, falling just 0.04 per cent from September, based on an aggregate of 14 major markets, CREA said.
However, home prices rose 0.48 per cent in Greater Vancouver in October compared with September, based on the MLS home price index benchmark price, while prices fell 0.4 per cent in Greater Toronto compared with September.
Home prices slid in Vancouver after a new foreign buyer's tax was introduced in August, 2016, but recovered by early 2017 and have continued to climb. In the Toronto region, however, prices began to fall sharply in May after the Ontario government announced a package of reforms in April to cool an overheated housing market, and only began to recover slightly in September.
Home prices were up 9.7 per cent in October nationally from a year earlier, CREA said, which is the smallest year-over-year increase since March.
Bank of Montreal chief economist Douglas Porter said cities around Toronto that were covered by the new housing measures announced in April saw home sales drop almost 24 per cent on average in October compared with a year earlier, while the rest of Ontario posted a much smaller sales decline of just 5 per cent.
Toronto prices are down 8 per cent from their peak in April, based on the MLS benchmark price. Mr. Porter said detached home prices are down 10.7 per cent since April and are still falling, while condo prices "have fully stabilized."
On a national basis, Mr. Porter said he anticipates total home sales will fall 3 per cent in 2018 after dropping about 5 per cent in 2017, while the MLS home price index will climb between 1 per cent and 2 per cent next year after rising roughly 14 per cent this year.
Bank of Nova Scotia economist Adrienne Warren said national house sales activity is showing signs of recovery heading into the year-end, led by a pickup in activity in Toronto and other markets in the Greater Golden Horseshoe region.
Sales climbed 2.5 per cent in the Greater Toronto Area in October over September on a seasonally adjusted basis. Sales were up 9 per cent in the Niagara region, and 6.6 per cent in the Hamilton-Burlington area.
Ms. Warren said sellers in the Toronto region are becoming more confident about listing their homes, and a return of more balance between sales and listings growth is helping to stabilize prices in the region.
"While sales in the region remain well below their earlier peaks, buyer nervousness following Ontario's spring policy changes has eased," she said in a research note.
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CREA chief economist Gregory Klump said sales momentum has started to recover this fall, but said it may slow again with the introduction of tougher new mortgage stress-testing rules, which come into effect on Jan. 1.
"It remains to be seen whether that momentum can continue once the recently announced stress test takes effect beginning on New Year's Day," Mr. Klump said in a statement. "The stress test is designed to curtail growth in mortgage debt. If it works as intended, Canadian economic growth may slow by more than currently expected."