TORONTO (Reuters) - A series of winter snowstorms that blanketed Eastern Canada through February cut into existing home sales for a third straight month, the Canadian Real Estate Association said on Friday.
Sales in Canada’s major markets fell 6.4 percent in February from January, to 26,588 units, according to CREA, an industry trade organization representing over 90,000 realtors.
The majority of the decline came in Toronto, which saw sales drop 11.2 percent. Canada’s biggest city accounts for about one-quarter of the total for the country’s major markets.
A series of winter storms brought record or near-record snowfall levels to Toronto and other major markets in Central and Eastern Canada, prompting many potential buyers to stay indoors.
“Snowfall in Toronto made it tough to show prospective buyers, and tough to process a listing,” said Ann Bosley, president of CREA.
The number of listings on CREA’s multiple listings service dipped by 2.8 percent, to 50,405 units, but was still the third-highest on record.
Average home prices climbed 5.3 percent year-over-year to C$327,477, the smallest such jump since November 2004.
“CREA’s forecast calls for sales activity to fall short of last year’s record, new listings to increase, a more balanced market, and smaller price gains,” said Gregory Klump, chief economist at CREA.
While price increases are beginning to moderate, years of steady gains have made owning a home more costly than at any point in the past 18 years, according to a report released by Royal Bank of Canada on Friday.
Housing affordability fell across the country in 2007, to end the year at its lowest level since 1990, said the report’s author, Derek Holt, assistant chief economist at RBC.
“Back then, soaring interest rates and a recession sparked much of the trouble,” he said.
“Today, a long upward trend in house prices, driven by sounder macroeconomic fundamentals, like job growth, is primarily responsible for the deterioration in affordability.”
The study looked at the proportion of pre-tax household income needed to service the costs of owning a home, including mortgage payments, utilities and property taxes.
The standard condo was the most affordable housing type, requiring about 30 percent of pretax household income.
A standard townhouse was next at 34.5 percent, followed by a detached bungalow at 42.5 percent while a standard two-storey home was the least affordable at 48 percent.
Vancouver, British Columbia, was the most expensive city in which to own a home. Costs associated with owning a detached bungalow there ate up 74 percent of a typical household’s pretax monthly income. Toronto came in at 47 percent, Calgary, Alberta, at 42 percent, Montreal was 37 percent and Ottawa was at 32 percent.
Looking ahead, falling mortgage rates, weakening house price gains and decent income growth should all lead to improved affordability across most markets, Holt said.
Reporting by John McCrank; editing by Rob Wilson