Rising mortgage rates goose Canadian home sales

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An 11.1 percent jump in August home sales from a year ago has the Canadian Real Estate Association upping its projections for 2013 sales. Much of the increase was attributed to increasing in mortgage rates, which pulled forward sales to buyers with preapproved financing, CREA Chief Economist Gregory Klump said in a statement.

“That pool of homebuyers has largely evaporated, so demand may soften over the fourth quarter,” Klump said. “The outsized year-over-year gains may persist, however, due to weak sales toward the end of last year,” following the implementation of tighter mortgage rules by Canadian regulators.

If 2013 sales hit CREA’s new estimate of 449,900 (up from a June forecast of 443,400) that would be just short of the 454,573 transactions seen last year. CREA is forecasting that 2014 home sales will hit 465,600 units, bringing them back in line with the 10-year average. That estimate assumes further economic, job and income growth combined with only slightly higher mortgage interest rates. Source: crea.ca.