Canada's Housing Bubble

May 17, 2010 Steve Ladurantaye theglobeandmail.com

Seasonally adjusted sales drop 2.6 per cent, the third decline in past four months

It was the busiest April on record for Canadian real estate agents who listed almost 100,000 homes, but the number of sales continued to inch downward as buyers stepped away from an increasingly expensive market.

The Canadian Real Estate Association said 99,901 home were put up for sale in April, a new monthly record. Many homeowners are hoping to sell at what some suggest may be the market's peak, as higher mortgage rates and rising prices discourage buyers from entering the market.

The number of homes being listed has dampened the market somewhat, however, as buyers have more choice and can take their time before making a purchase. Seasonally adjusted national home sales slipped 2.6 percent from March, and are now 6.8-percent lower than they were in December.

The price for an average home was $344,968, 12.2-percent higher than the average price a year ago. It's the smallest increase in eight months, with month-over-month comparisons getting smaller because the recovery began about a year ago.

"With last year's string of downwardly skewed average price values having now mostly passed, and with activity in British Columbia's lower mainland having settled down, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price," CREA stated.

On a seasonally adjusted basis, there were 5.3 months of inventory on the market. That's the number of months it would take to sell all the houses available at the current pace of sales. It's the most inventory since last May.

"Next month will mark the passage of one year since the national average price rebounded from the recessionary trough to return to the pre-recession peak, so the rise in the national average price is expected to be more subdued next month," said CREA chief economist Gregory Klump.