TORONTO, ONTARIO--(Marketwire - Oct. 15, 2012) - While today's Canadian home sales numbers for September from the Canadian Real Estate Association (CREA) suggested a significant drop, the details are not nearly as weak, according to BMO Economics. The CREA stats show sales were down 15.1 per cent from year-ago levels last month, but up 2.5 per cent from August in seasonally adjusted terms.
"The issue here is that there were just 20 weekdays this September, compared with 22 a year ago," said Doug Porter, Deputy Chief Economist, BMO Capital Markets. "That 9 per cent drop alone accounts for a big chunk of the year-on-year decline. Still, while the underlying trend in sales is likely not as dire as the headline yearly drop would suggest, there is little doubt that sales have taken a step back in recent months."
Mr. Porter added that September marked the second full month under stricter mortgage rules that took effect July 9th, and in the past three months combined sales are down about 7 per cent from year-ago levels, compared with a rise of nearly 5 per cent year-over-year in the first six months of the year.
Among major Canadian cities, 18 of 26 reported better sales versus August, yet only 3 were up from year-ago levels (Calgary, Edmonton and Sherbrooke). New listings pulled a broadly similar trick, rising a seasonally adjusted 6.5 per cent from August, but down 4.2 per cent year-over-year.
"Bottom line is still that the market balance is shifting in the buyer's favour: the months' supply of homes for sale nudged down to a seasonally-adjusted 6.4 in the month - from 6.6 in August - but that's well up from the March low of 5.6 and a five-year average of about 6," noted Mr. Porter.
Laura Parsons, Mortgage Expert, BMO Bank of Montreal, noted that the recent shift to a buyers market should be greeted with optimism by those who have been waiting on the sidelines over the past year.
"The increase in homes for sale is good news for those who have been waiting for the right opportunity to dip their toes into the housing market," said Ms. Parsons. "With another busy buying season upon us, it's important that potential buyers review their financial plans and make the necessary adjustments to reflect changes in the marketplace before heading out to property shop during the busy fall period."
Ms. Parsons recommended that those who are ready to enter to marketplace get a head start on planning by getting pre-approved for a mortgage before setting out to lock down the perfect home.
The analysis from BMO Economics also implied that while slower market conditions are tempering prices, this trend isn't playing out in all markets.
"Average prices were just 1.1 per cent above year-ago levels in September, but the more-representative MLS Home Price Index (HPI) was still up 3.9 per cent, though it has now slipped slightly in three straight months," said Mr. Porter. "Location is crucial on this measure, as the HPI for both Vancouver at -0.8 per cent year-over-year and the Lower Mainland B.C. at -0.1 per cent are down from a year ago, while Toronto prices are up a solid 5.7 per cent year-over-year and Regina has jumped 14.2 per cent."
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.