Canada existing home sales soften in December: CREA

Wed Jan 15, 2014 9:37am EST
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By Andrea Hopkins

TORONTO (Reuters) - Sales of existing homes in Canada dropped sharply in December from November, the Canadian Real Estate Association said on Wednesday, adding to a string of data showing Canada's housing market was cooling as 2013 drew to a close.

The industry group for Canadian real estate agents said sales activity was down 1.8 percent last month from November. Actual sales for December, not seasonally adjusted, were up 12.9 percent from December 2012, which was a particularly weak month.

December's drop in sales was the third straight monthly decline, and overall activity now stands 5.2 percent below the peak reached in September 2013, CREA said.

Activity has gradually eased back from stronger-than-expected levels last summer and is now roughly in line with the ten-year monthly average, CREA President Laura Leyser said in the report.

"We'll likely continue getting mixed signals in the months ahead, with positive year-over-year comparisons for sales masking the recent moderation in the monthly sales trend."

The housing market cooled in 2012 after Canada's government tightened mortgage rules due to worries that low interest rates were prompting Canadians to take on too much debt.

While the sector bounced back in 2013, some signs of a slowdown began to emerge in the final months of the year, with building permits and housing starts falling and prices leveling off amid speculation about rising mortgage rates and oversupply.

The market is widely expected to cool further in 2014 as mortgage rates rise gradually. Most economists say they expect the market will have a soft landing from its boom years rather than a U.S.-style crash.   Continued...

Construction workers work on a house in Lac-Megantic, November 21, 2013. REUTERS/Mathieu Belanger