Summer Market Update- June Brought Fresh Supply of Newly Built Homes to The Market
As per Canada Mortgage and Housing Corporation (CMHC), supply of new home builds rose 24.8% in June at 245, 657 units from 196, 809 units in May.
The seasonally adjusted annual rate (SAAR) of urban starts rose by 26% to 234, 238 units last month, with a 31% increase in multi-unit projects at 185, 804 units and 8% increase in single-detached homes at 48, 434 units. Rural starts were estimated at 11, 419 units.
June saw a very weak gain in national home prices, looking at the long-term average for the month. The Teranet-National Bank Composite House Price Index showed that prices increased by 0.8% last month from May, which was a smaller increase than the 21-year average of 1.2%.
The increase was likely due to seasonal pressure only; if removed the index would have seen a fall of 0.5% in June. The year-over-year gain seen was also the smallest since November 2009 at 0.5%.
Price drops were seen consistently all over western Canadian markets. Vancouver is one month short of completing a year without showing any gains, as is Calgary. Edmonton also saw a flat month.
As per Marc Pinsonneault, a senior economist with National Bank of Canada, these readings were consistent with signals from other indicators of soft resale markets in those metropolitan areas.
In the eastern part of the country, Toronto, Hamilton and Ottawa recorded gains for three straight months, while Montreal recorded an increase of 0.8%, the 13th index rise in 15 months, according to
There was almost no increase in national home sales numbers in June. Canadian Real Estate Association (CREA) said that transactions fell by 0.2% in May, the first decline seen in four months. On a quarterly basis though, sales climbed by 5.3%, evidence of stabilization after two quarters of decline.
However, the data varied geographically over Canada. Western parts of the country were seen struggling, with decrease in sales by 5.5% recorded in Vancouver and 3.9% in Calgary. As per Gregory Klump, CREA’s chief economist, “While sales activity in Canada’s three westernmost provinces appears to have stopped deteriorating, it will be some time before supply and demand there becomes better balanced.”
For Vancouver, sales activity looked somewhat better when seen in terms of quarterly figures. Sales rose by 12% in the second quarter of the year, the most since the second quarter of 2017, and breaking the pattern of five consecutive quarters of decline that brought the activity in the city to its lowest level since the 2009 recession, according to Bloomberg.
Toronto sales figure was almost unchanged at 0.2% and Montreal saw an increase of 2.7%.
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