January 15, 2018 / 2:51 PM / 6 months ago

Canadian home sales rise for fifth straight month in December: CREA

OTTAWA (Reuters) - Resales of Canadian homes rose 4.5 percent in December from November, the fifth straight monthly rise, likely because activity was pulled forward to avoid mortgage rule changes that hit in January, the Canadian Real Estate Association said on Monday.

FILE PHOTO: A real estate for sale sign is pictured in front of a home in Vancouver, British Columbia, Canada, September 22, 2016. REUTERS/Ben Nelms/File Photo

The industry group said actual sales, not seasonally adjusted, rose 4.1 percent from December 2016, while home prices were up 9.1 percent from a year earlier, according to the group’s home price index.

Activity was up in close to 60 percent of all markets, including the Toronto area, with sales fully recovering from the slump last summer, CREA said.

Still, the market is braced for a possible slowdown in January, as new mortgage stress tests required by the regulator are expected to take some homebuyers out of the market.

“It will be interesting to see if monthly sales activity continues to rise despite tighter mortgage regulations that took effect on January 1st,” CREA’s Chief Economist Gregory Klump said in the report.

The housing market in Toronto, Canada’s largest city, and nearby cities cooled dramatically in the summer after the province imposed new measures to curb speculation, including a foreign buyers tax, amid fears of a housing bubble.

Analysts are divided over whether the nation’s long housing boom will crash or achieve a soft landing as a series of mortgage rule changes and rising interest rates weigh on demand.

The CREA report showed the number of new listings rose 3.3 percent in December, while the inventory dipped to 4.5 months.

The national average price for homes sold in December rose 5.7 percent from a year earlier to just over C$496,500 ($399,565), continuing a deceleration in home price appreciation as the softening in Toronto took some steam out of price gains.

($1 = 1.2426 Canadian dollars)

Reporting by Andrea Hopkins in Ottawa and Fergal Smith in Toronto; Editing by Chizu Nomiyama

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