Slumping homes sales in Canada saw an uptick in June, marking the first substantial month-over-month increase of 2018, according to a new study published on Monday by the Canadian Real Estate Association.
Lead by a surge of activity in Toronto, home sales leaped 4.1 percent between May and June while the average sales price for a home in Canada decreased by 1.3 percent year over year, according to the study.
Homes sales across Canada have struggled to reach the heights of the previous five years, largely due to tightening regulations on home mortgage lending and rising interest rates. Overall sales activity across Canada remains 11 percent below 2017 and nearly 7 percent below normal activity in June.
“This year’s new stress-test on mortgage applicants has been weighing on homes sales activity,” said Canadian Real Estate Association President Barb Sukkau. “However, the increase in June suggests its impact may be starting to lift,” . “The extent to which the stress-test continues to sideline home buyers varies by housing market and price range.”
The modest uptick, however, could signal a thaw in the housing market. While the number of newly listed homes dropped 1.8 percent in most major Canadian cities, June’s activity surge evened the sales-to-new-listings ratio to 54.3 percent.
“The national increase in June home sales suggests activity may indeed be starting to turn the corner,” said Gregory Klump, chief economist of the Canadian Real Estate Association. “Even so, the number of homes trading hands has a long way to go before it returns to levels posted in recent years.”
In Toronto, homes sales surged by 17 percent, thanks in part to a modest decline in pricing across Greater Toronto.
“Looking ahead, home sales activity and price gains will likely be held in check by higher interest rates,” Klump said.