Canadian home prices continue to climb but buyers and sellers sit on the sidelines in January

Fewer homes were sold in January compared to December as prices climbed higher and new supply remained tight, according to a new survey.

National home sales fell by 2.9 per cent in January, month-on-month, with the steepest decline of 18 per cent seen British Columbia’s Vancouver area — Canada’s most expensive housing market, according to a report by the Canadian Real Estate Association.

At the same time, CREA’s home price index rose 0.8 per cent compared to December, and 4.7 per cent year-on-year — its eighth consecutive monthly gain.

“It is now up 5.5 per cent from last year’s lowest point in May and has set new records in each of the past six months,” CREA said.

The number of new listings on the market was relatively flat, rising just 0.2 per cent, and near a decade-low amid dearth of new supply across much of the country, although it was up 11.5 per cent year-over-year, marking the best January in home sales since 2008.

The real estate association suggested that both sales and listings might pick up again in the spring.

“Looking at local market trends across the country, one thing that stands out in markets with historically tight supply is a larger than normal drop in new listings at this time of the year,” said Shaun Cathcart, CREA’s senior economist.

Deferred listings mean deferred sales, which could explain some of January’s decline in activity

“The logic being that if you are a seller, you’re not just choosing when to list but effectively when to sell, so why not hold off until the spring when the weather is better, and more buyers are looking,” Cathcart said. “Deferred listings mean deferred sales, which could explain some of January’s decline in activity. “

The report said that prices are on the rise again in British Columbia, as well as the Golden Horseshoe region of Ontario.

“Further east, price growth in Ottawa, Montreal and Moncton continues as it has for some time now, with Montreal and particularly Ottawa having strengthened noticeably in recent months,” CREA said in its report.

Meanwhile, home prices in the Prairie provinces and Newfoundland and Labrador continue to fall, the report said.

Source: Financial Post