Potential home sellers are pulling back in the Vancouver region, reducing the supply of new listings as the real estate market cools and seeks to regain its balance.
There were 1,380 new listings in Greater Vancouver in December, down 50 per cent from November, and a drop of 15.3 per cent from December, 2011.
December marked the seventh consecutive month of year-over-year declines in the number of new listings.
"Demand got crimped last July when Ottawa introduced tighter mortgage insurance rules," said Bryan Yu, the Vancouver-based economist at Central 1 Credit Union.
"However, some sellers are pulling off supply, and that tends to firm up pricing. Interest rates are remaining low, so home sellers aren't in a position where they are forced to sell their properties. They have the option to stay on the sidelines for a while," he said.
The number of residential properties sold in Greater Vancouver fell 22.7 per cent in 2012, while house prices posted a relatively small drop.
The December home index price, which strips out the most expensive properties, was $590,800 for sales on the multiple listing service (MLS), a drop of 2.3 per cent from the same month in 2011.
A total of 25,032 single-family detached homes, condos and townhouses changed hands in 2012, down from 32,387 in 2011, the Real Estate Board of Greater Vancouver said Thursday, adding that the slowdown in sales volume last year was off 25.7 per cent from the 10-year average.
Prices would have fallen further were it not for the reduction in new listings.
"Some prospective sellers don't have confidence that they will be able attain their price. Rather than reducing their price expectations, they aren't putting their homes on the market," said board president Eugen Klein.
The average number of days a home stayed on the market increased to 73 days for properties sold in December, compared with 64 days December, 2011.
Those averages do not factor in historical data for homes that languish on the market and start the clock ticking again by being relisted.
Index prices for single-family detached homes on Vancouver's closely watched west side in December came in at $2-million, down 9.1 per cent over the previous six months but a smaller loss of 5.5 per cent year-over-year.
December prices for single-family properties in Richmond slid 6.5 per cent year-over-year, but other local markets strengthened slightly, notably Coquitlam, Burnaby South, Maple Ridge, Port Coquitlam, Port Moody and Vancouver's east side.
Sales volume on the MLS reached 1,142 in December, a drop of 31.1 per cent from same month in 2011 and down 38.4 per cent from the 10-year average of 1,855 for December sales.
Mr. Klein noted that during the region's real estate slowdown, an measurement known as the sales-to-listings ratio has tumbled. To arrive at the ratio, take the number of homes sold in a month and divide it by the number of active listings for that month. December's ratio of sales-to-active listings works out to 8.2 per cent – indicating it is clearly a buyer's market in Greater Vancouver, Mr. Klein said.
In the Fraser Valley, which includes the sprawling and less-expensive Vancouver suburb of Surrey, there were 13,878 residential sales last year, or an 11-per-cent decline from 2011.
December benchmark prices rose 0.5 per cent year-over-year to $420,600 in the Fraser Valley.