http://www.theglobeandmail.com/repo...dvance-for-third-month/article1799092/resales advance for third month
STEVE LADURANTAYE
Globe and Mail Update
Published Monday, Nov. 15, 2010 9:35AM EST
Last updated Monday, Nov. 15, 2010 9:50AM EST
Canada's resale housing market improved for the third month in a row in October, although prices came precariously close to declining compared to the same time last year. The average resale price was $337,842, which the Canadian Real Estate Association said was “up less than a percentage point compared to one year ago,” although prices are up slightly from September.
Prices peaked in May, when they hit $346,881.
Sales increased by 4.6 per cent over September, CREA said, but were down 21.6 per cent from last October, which was the busiest October on record.
“National sales activity is now running almost halfway between the highs and lows posted between late 2008 and late 2009,” said Gregory Klump, CREA’s
chief economist, in a statement. This suggests that the Canadian housing market may be starting to normalize. After the wild rollercoaster ride that many housing
and stable market conditions are something that many buyers and sellers will likely welcome.”
The
number of months of inventory - how long it would take to sell all the houses on the market given the current pace of sales -
dropped to 6.2 months from 6.5 months in September.
“The continuation of low interest rates is supporting sales activity, which has been improving over the past few months in a number of major markets including Vancouver,” said Georges Pahud, CREA’s president, in a statement.
CREA slashed its home-sales forecast two weeks ago, saying activity will decline this year and next. National sales activity is expected to fall 4.9 per cent this year and sales will tumble another 9 per cent next year.
Prices are expected to fare better – ending this year 3.1 per cent higher than they started before falling 1.3 per cent next year.
Lackluster economic and job growth, muted consumer confidence, and the resumption of interest rate hikes next year are the main reasons behind the lower sales forecast. Private sector forecasts vary for next year, with some banks expecting prices to fall as much as 10 per cent in the next year.
"
The last three months of data suggest that a trough in resale housing activity may have formed earlier than we expected," said Toronto-Dominion Bank senior economist Pascal Gauthier.
"Heading into 2011, sales and prices appear better supported than we last forecast in September. We will be making an updated forecast available in the next few days. The stabilization and ensuing uptick in resale housing activity should also help to limit the downside risk to the overall economy. On the flipside, subdued employment and income growth in the quarters ahead should act to cap the housing market’s upside in 2011. "
Canada Mortgage and Housing Corp., meanwhile, said Monday that housing starts for 2011 will slow to “levels consistent with demographic fundamentals.”
The federal agency forecasted that housing starts will range between 176,700 and 194,700 units 2010, and between 148,000 to 202,300 units next year.
“High employment levels and low mortgage rates will continue to support demand for new homes in 2011,” CMHC chief economist Bob Dugan said. “Nevertheless, housing starts will decrease to levels are more in-line with long term demographic fundamentals next year.”
From the Globe and Mail website:
I discount alot of the CREA spin: They finally are acknowledging the price peaked in May 2010. There is some hope in the decline in inventory.
While the Banks too have a vested interest to report positive data, the suggestion of a trough forming would be very good news though it is clearly too early to tell. Not sure I buy this. Remember there is a normal pickup in Sept and October before it quiets again until Feb so we shall see if this truly is a trough or a temporary blip.
