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The payback continues with home sales falling again in Feb following regulatory changes

Discussion in 'News Canada' started by Tina Myrvang, Mar 21, 2018.

  1. Tina Myrvang
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    Tina Myrvang Client Care Specialist Staff Member REIN Member

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    RBC-Economics- We have just released our latest monthly housing market update entitled “The payback continues: home sales fell again in February following regulatory change on Jan 1".
    Highlights of the report:
    • Canadian home sales fell 6.5% month-over-month on a seasonally adjusted basis in February following a 13.8% decline in January.
    • The swing in resale activity—from a record high in December to a nearly five-year low in February—is largely in response to tighter qualifying requirements for uninsured mortgages introduced on January 1. January’s interest rate hike by the Bank of Canada also might have impacted sales activity in February.
    • The decline in resales was once again widespread across the country, providing further evidence that regulatory changes and not local market conditions were behind softer activity early this year.
    • Sellers moved to the sidelines in January, and while new listings rose 8.1% in February they remained at one of the lowest levels in recent years.
    • The decline in resales and pickup in new listings pushed the sales-to-new listings ratio back into ‘balanced’ territory at 0.55 in February.
    • The pace of price growth continued to slow, dipping to 6.9% year-over-year from 7.7% in January. The Toronto area once again accounted for most of this deceleration.
    • A good portion of the slowing in resales early this year simply reflects payback for activity pulled forward into 2017. But the scope of declines suggest tighter mortgage regulations are indeed having a cooling effect. Whether that impact is largely psychological or reflects a substantial pool of buyers being shut out by stricter qualifying rules remains to be seen. How the market evolves through the upcoming Spring sales season will be informative.

    Link to the full report
    To view, print and download the new report, click on the following link:

    http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/housespecial-mar18.pdf

    Josh Nye | Economist, RBC Economic Research | Royal Bank of Canada | T. 416-974-3979


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