Resale housing activity in Canada’s major markets set new all-time monthly and quarterly records in June 2005, and are running ahead of sales activity in the first half of last year, according to statistics released today by The Canadian Real Estate Association.
On a seasonally adjusted basis, the number of homes trading hands via the Multiple Listing Service in Canada’s major markets in June reached the highest monthly level in history with 29,347 transactions. This represents an increase of 3 percent compared to May and is 0.8 percent higher than its previous monthly peak in July 2003.
Strong monthly sales were recorded throughout the second quarter of 2005. On a seasonally adjusted basis, a total of 85,924 homes traded hands via MLS in major markets in the second quarter of 2005 – an increase of 8.6 percent compared to the first quarter of 2005 and 3.4 percent higher than the previous quarterly high reached in the second quarter of 2004.
Actual home sales numbered 179,759 units in the first half of 2005 – 1.1 percent above the previous record for first-half activity set in 2004. On a seasonally adjusted basis, sales activity in the first half of 2005 was up 1.9 percent compared the same period in 2004. Driven by sales activity in Vancouver, Calgary and Edmonton, strong second-quarter results pushed the activity in the first half of 2005 to the second-highest level on record for any six-month period.
Actual MLS residential new listings numbered 295,404 units in the first half of 2005 – an increase of 4.4 percent from the first half of 2004 and the highest level recorded for the first six months of any year since 1990. On a seasonally adjusted basis, new listings reached its fourth highest level for any six-month period on record.
“A bigger increase in new listings than sales caused the market to become slightly more balanced in the first half of 2005 compared to the first six months of 2004,” said CREA’s Chief Economist Gregory Klump. “Even so, the major-market MLS residential average price continued its steep ascent and set new records for the month, quarter, and for the period from January to June.”
The major-market MLS residential average price reached $272,336 in June, up 9.5 percent from the same month last year and 1.2 percent above the previous record set in May 2005.
Average price also reached the highest level ever for the month of June in a number of major markets, including Vancouver, Edmonton, Ottawa and Montreal.
The major-market MLS residential average price rose 8.5 percent year-over-year in both the second quarter and the first half of 2005, and set new quarterly records in almost every major market in Canada.
“The continuation of low interest rates will keep the resale housing market hot over the rest of the summer,” said Klump. “Even when short-term interest rates begin to inch higher in September, interest rates will still be low and attractive, and do little to derail consumer confidence or the resale housing market. Combined with the strongest quarterly job creation in a year in the second quarter, resale housing demand will remain strong over the rest of the year.”
Short-term interest rates are expected to rise only gradually, and should be no more than 1 percent to 1 1/2 percent higher than where they are now by the end of next year, according to CREA. Higher interest rates and resale housing prices are expected to result in a soft landing next year for housing.
“High oil prices may soften U.S. economic growth and postpone expected U.S and Canadian interest-rate increases to next year, so housing activity could remain stronger and have longer legs than expected,” said Klump.
The Canadian Real Estate Association is one of Canada’s largest single-industry trade associations, representing more than 76,000 Realtors working through 102 real estate boards, 10 provincial associations, and one territorial association.
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