September Housing Market Recap: Home Construction Down, Prices, Sales Up


By: Which Mortgage

New Home Builds Slow Down

The number of newly built homes in Canada slowed by 2.5%, offsetting the 1.9% growth it saw in August.

The seasonally adjusted annual rate (SAAR) of housing starts dropped to 221,202 units from 226,871 units in August, according to Canada Mortgage and Housing Corporation.

However, the September figure was still higher than the 214,500 units that economists have expected on average, according to financial markets data firm Refinitiv.

The overall decline in the pace of housing starts came as the pace of urban starts dropped by 2.4% to 208,503 units. Urban starts of apartment, condo and other multi-unit housing projects edged down by 0.2% to 159,742, while the starts of single-detached urban homes dipped by 9.2% to 48,761 units.

Meanwhile, rural starts were estimated at a SAAR of 12,699 units.

In contrast, the six-month moving average of the monthly SAAR of housing starts rose to 223,507 from 218,782 in August.

Home Prices See Modest Gains

National home prices edged up, led by gains in Montreal and Ottawa-Gatineau.

The Teranet-National Bank Composite House Price Index, which measures changes for resales of single-family homes, showed that prices rose by 0.1% from August.

The gain was slightly below the 21-year average of 0.2% for the month of September. Still, the index was higher for the second consecutive month after correcting for seasonal pressure, said Marc Pinsonneault, National Bank of Canada’s senior economist.

The index for Montreal increased by 1%, while Ottawa-Gatineau’s index was up by 0.8%. In contrast, Vancouver’s index fell by 0.5%, the 14th straight month that it was down.

Compared to September 2018, the composite index gained 0.7%. That was much less than the inflation rate, but it was the second consecutive month that the year-over-year gain accelerated, Pinsonneault said.

For Toronto, the year-over-year increase was 4%.

Home Sales Up from February

Home sales across Canada rose for the seventh straight month, according to the Canadian Real Estate Association (CREA).

CREA’s data revealed that national home sales edged up by 0.6% from August, bringing them 18% above the six-year low reached in February.

Sales climbed by 15.5% on a year-over-year basis, reflecting the combination of slow sales in September 2018 and a rebound in activity this year. However, last month’s sales were still ~8% below highs reached in 2016 and 2017.

From year-ago levels, sales activity increased in all of Canada’s largest urban markets, including the Lower Mainland, Calgary, Edmonton, Winnipeg, the Greater Toronto Area, Hamilton-Burlington, Ottawa, and Montreal.

“Home sales activity and prices are improving after having weakened significantly in a number of housing markets,” said Gregory Klump, CREA’s chief economist. “How long the current rebound continues depends on economic growth, which is being subdued by trade and business investment uncertainties.”

The number of newly listed homes edged down by 0.6%. The modest increase in sales, combined with the slight decline in new supply, tightened the national sales-to-new-listings ratio to 61.3%.

At the end of September, there were 4.5 months of inventory nationwide – the lowest level recorded since December 2017. This market-balance measure has been increasingly retreating below its long-term average of 5.3 months.

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