(Reuters) - Toronto home sales tumbled in October from a year earlier and prices were down 15.1 percent from their April peak, but sales rose sharply from September, suggesting the housing market in Canada’s largest city may be steadying, data showed on Thursday.
Sales volumes rose nearly 12 percent in October from September but were down 26.7 percent from a year earlier as Canada’s largest market regained some momentum after government moves to rein in demand, a report from the Toronto Real Estate Board showed.
The housing bounce in September from October could continue through year-end as buyers try to complete purchases before tighter mortgage rules take effect in January, even as the potential for further price declines has weighed on demand.
“Basically the market appears to be stabilizing and should continue to stabilize under the new mortgage rules. What we won’t see is a return to mania that gripped the markets during the winter,” said Sal Guatieri, senior economist at BMO Capital Markets.
Sales fell 26.7 percent from October 2016, TREB said. It was the seventh straight month of declining year-on-year sales after a years-long boom that sparked fears of a bubble.
The average selling price was up 2.3 percent from a year earlier, but still 15.1 percent below the April peak.
The Ontario government in late April introduced multiple measures, including a foreign buyers tax, in a bid to cool the Toronto region’s surging housing markets.
The impact of those measures and two recent rate hikes by the Bank of Canada will be compounded when new rules aimed at safeguarding lenders and borrowers come into effect across Canada on Jan. 1.
“(Our) agents are working with several buyers wanting to close before then. It’s likely that we will see a busier market than expected for sales in November and December as a result,” Zoocasa Chief Executive Lauren Haw said in an emailed statement.
New listings rose 11.8 percent from a year earlier, while active listings were up 78.5 percent as properties sat on the market longer.
The new mortgage rules, which will reduce the amount of financing available to most borrowers, will continue to push buyers into less expensive homes, boosting demand for condos, while detached homes are sitting longer, Guatieri said.
“We expect buyers to continue to shift into the low end of the housing market over next six months, and that means more downward prices on the detached market,” Guatieri said.
Reporting by Julie Gordon in Vancouver and Andrea Hopkins in Ottawa; Editing by Peter Cooney and Susan Thomas