August Housing Market Recap: New Builds, Prices, Sales on the Rise

By: Which Mortgage

New Home Builds Up Monthly

The number of newly built homes in Canada grew by 1.9% as the housing market rebounded from its recent slowdown.

The seasonally adjusted annual rate (SAAR) of housing starts rose to 226,639 last month from 222,467 units in July, the Canada Mortgage and Housing Corporation said.

On average, economists have expected an annual pace of 215,000, according to financial markets data firm Refinitiv.

The six-month moving average also increased, from 208,931 in July to 218,998 last month.

Last month’s increase in the annual pace of housing starts came as the pace of urban starts rose by 2% to 213,663 units. Single-detached urban starts increased by 13.6% to 53,275 units, while multiple-unit urban starts fell by 1.4% to 160,388 units.

Rural starts were estimated at a SAAR of 12,976 units.

Home Prices Increase Monthly, Annually

Canadian home prices rose for the fourth straight month, while the annual increase picked up for the first time in nine months.

The Teranet-National Bank Composite House Price Index, which measures changes for resales of single-family homes, showed that prices increased by 0.4% last month from July.

The index was also higher when seasonally adjusted, which was not the case in May, June and July, said Marc Pinsonneault, National Bank of Canada’s senior economist.

Still, last month’s increase was below the average for August seen over the past 21 years covered by the index.

Compared to August 2018, the index gained 0.6%, led by a 6.4% advance for the capital region of Ottawa-Gatineau. For Toronto, the year-over-year gain was 3.8%.

Meanwhile, some western Canadian markets were a drag on the index, including Vancouver, which was down by 6.6%.

Home Sales Show Six-Month Growth

Canadian home sales advanced for the sixth consecutive month, according to the Canadian Real Estate Association (CREA).

CREA’s data revealed that national home sales rose by 1.4% from July and by 5% from August 2018.

Sales activity was up in more than half of all local markets, although monthly changes were generally modest across most of Canada. Winnipeg and Fraser Valley led the gain.

From year-ago levels, the number of homes that traded hands was up in most of the country’s largest urban markets, including the Lower Mainland, Calgary, Winnipeg, the Greater Toronto Area, Ottawa and Montreal.

“The recent marginal decline in the benchmark five-year interest rate used to assess homebuyers’ mortgage eligibility, together with lower home prices in some markets, means that some previously sidelined homebuyers have returned,” said Gregory Klump, CREA’s chief economist. “Even so, the mortgage stress test will continue to limit homebuyers’ access to mortgage financing, with the degree to which it further weighs on home sales activity continuing to vary by region.”

The number of newly listed homes also rose last month, by 1.1%. With sales and new supply rising by similar magnitudes, the national sales-to-new-listings ratio edged up to 60.1% – just 0.1% higher from July. The measure has surpassed its average of 53.6% in recent months, which indicates a tighter balance between supply and demand and a growing potential for price gains.

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