Home resales up in June but Vancouver cools

Fri Jul 15, 2011 12:51pm EDT
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TORONTO (Reuters) - Sales of existing homes in Canada rose 2.6 percent in June from May with increases in most markets across the country except for high-priced Vancouver and Toronto, the Canadian Real Estate Association (CREA) said on Friday.

It said 37,578 homes were sold in June, up 10.8 percent from the same month in 2010, when sales were in a mini-slump.

Sales in Vancouver fell 1.7 percent in the month, while Toronto dipped 0.4 percent. CREA said the national housing market remains well balanced and said fundamentals point to healthy home sales activity and prices going into the second half of 2011.

CREA chief economist Gregory Klump said that recent Bank of Canada surveys showing upbeat business sentiment and hiring intentions, and signs that the central bank is in no rush to raise interest rates bode well for home sales activity, .

"The Canadian housing sector remains on a solid footing," he said.

Earlier this week, Toronto-Dominion Bank economists said the market, which some feared had been overheating, is poised to cool down with sales and prices expected to fall by 15.2 percent and 10.2 percent, respectively, over the next two years.

A slower pace of sales is already evident. In the second quarter overall, national sales fell 4.7 percent from the first quarter, partly because of a rush to buy in the first quarter ahead of tougher mortgage rules implemented in the spring, CREA said. Higher mortgage rates in April and May also pushed some homebuyers to the sidelines in those two months.

"Stricter mortgage rules and declining affordability appear to be taking at least some momentum out of prices, a trend that could continue if the Bank of Canada resumes its (monetary policy) tightening campaign in the fall," said Robert Kavcic, an economist at BMO Capital Markets.

CREA said the national average price in June was up 8.7 percent from a year earlier at C$372,700 ($388,229), but that the extent of the increase was skewed because of sales of expensive homes in certain Vancouver neighborhoods.   Continued...

<p>A sold sign is displayed in front of a home in Toronto December 15, 2009. REUTERS/Mike Cassese</p>