Canadian home sales fell for the first time in five months in September amid weakening markets in Vancouver and Toronto.
The Canadian Real Estate Association said Monday national home sales dropped 0.4 per cent last month compared to August, marking the first month-over-month decline since April.
Home sales moved lower in more than half of all local markets, led by Vancouver Island and Edmonton, along with several markets in Ontario’s Greater Golden Horseshoe region.
The drop came as home sales compared with a year ago fell 8.9 per cent.
In Vancouver, sales were down by 1.5 per cent and benchmark prices fell by 1.2 per cent last month. In Toronto, sales fell by 0.5 per cent and benchmark prices were up slightly by 0.1 per cent.
CREA president Barb Sukkau says rising mortgage rates and the new mortgage stress test will continue to influence the balance between supply and demand with most markets expected to “become even more restrictive” in the months to come.
The group’s chief economist Gregory Klump adds that time will tell how these factors will play out for certain cities.
“In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price,” he said in a statement.
“However, in places where buyers are keen to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price. It will be interesting to see how supply and demand respond to rising interest rates amid this year’s new mortgage stress-test.”
The new mortgage stress test came into effect in January, adding downward pressure on property values that were still adjusting to other newly introduced measures such as a 15 per cent foreign buyer tax in Ontario.
TD Economics says the report points to a more “moderate pace” for the Canadian housing market in the coming quarters.
“This is consistent with our forecast calling for resale activity to rise at a more moderate pace in coming quarters, as increasing borrowing costs and stretched affordability conditions in key markets keep a lid on demand,” bank economist Rishi Sondhi said in a note.
The association says the national average price for a home sold in September was just under $487,000, up 0.2 per cent compared with a year ago.
Excluding the Greater Toronto Area and Greater Vancouver Area, the average price was just over $383,000.