Home sales edge higher, price gains cool

Mon Jan 16, 2012 12:46pm EST
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By Jeffrey Hodgson

TORONTO (Reuters) - Existing homes sales rose only slightly in Canada last month, while the average sale price declined, offering further evidence the once hot market is cooling under pressure from a slowing economy, tighter mortgage rules and anxiety about global financial troubles.

The Canadian Real Estate Association (CREA) said 39,740 homes changed hands in December, up 1.8 percent from a month earlier, using seasonally adjusted calculations. The number of listings rose 3 percent from November.

Actual sales rose 4.6 percent from December 2010.

The average sale price was C$358,480 ($349,900), down 0.9 percent from November on a seasonally adjusted basis.

The industry group said the actual average house price in December rose just 0.9 percent from a year earlier, the smallest increase since October, 2010.

"Activity and prices decelerated over the second half of 2011 due to tighter mortgage regulations and the exhaustion of pent-up demand," Mazen Issa, a strategist with TD Securities, said in a note to clients.

"Heading forward, we expect these factors along with stretched balance sheets, damaged confidence and uncertainty with respect to events in the global economy to weigh on the market for existing homes."

The report follows data earlier this month that showed Canadian housing starts climbed more than expected in December, fueled by low mortgage rates and a boom in condo construction, even as analysts predicted the once-hot sector would cool further in 2012.   Continued...