Canadian home sales increased by 1.9% from April to May, making May the strongest month for sales activity in 16 months.
That data comes from the Canadian Real Estate Association (CREA), which said that sales in May were up 6.7% year-over-year, marking the third consecutive month where home sales saw an annual increase after a historic slump in February, when sales fell to their lowest level in more than six years.
The improvement in May was led by increased sales numbers in Toronto and Vancouver. However, those sales numbers offset the fact that sales did not increase in about half of the country’s local housing markets. Sales in the Greater Toronto Area (GTA) were especially strong, accounting for close to half of the country’s overall sales increase.
This means that home sales are now in line again with the 10-year average for the month of May, according to CREA.
While home sales climbed, prices followed suit. The average price of a home in Canada was $508,000 in May, up 1.8% year-over-year. However, those prices are skewed by disproportionately high prices in Toronto and Vancouver: when the two markets are excluded from the equation, the national average falls to just under $397,000.
Another method that CREA uses to measure home prices is the MLS Home Price Index (HPI), which tracks price changes for “middle-of-the-range” homes rather than high-end or low-end properties. It says that doing this allows for a more accurate picture of prices — for instance, if more mansions than usual are sold in a given month, they could disproportionately skew prices higher.
According to the HPI, home prices fell by 0.6% compared to May 2018 — the largest decline in almost a decade.
This decline applied to every major home type, said CREA, including townhouse/row and apartment units (-0.2% year-over-year), two-story detached homes (-0.5%) and one-story detached homes (-1.7%).
In British Columbia, prices fell by 8.9% in the Greater Vancouver Area, while inching up by 1% in Victoria and 4.7% elsewhere on Vancouver Island.
The GTA fared better, with prices climbing 3.1%. Other areas of Ontario also saw modest price increases compared to last May, including Guelph (5.7%), the Niagara region (5.4%), Hamilton-Burlington (3.4%), Oakville-Milton (3.4%) and Ottawa (8%).
“The mortgage stress-test continues to present challenges for home buyers in housing markets where they have plenty of homes to choose from but are forced by the test to save up a bigger down payment,” said Gregory Klump, chief economist at CREA.
“Hopefully the stress-test can be fine tuned to enable home buyers to qualify for mortgage financing sooner without causing prices to shoot up.”