New mortgage stress test continues to hamper Canadian home sales

New listings were down in more than half of all local markets, led by Calgary, Edmonton and Greater Vancouver

Actual sales (not seasonally adjusted) on Canadian MLS Systems were down 1.3 percent in July 2018 from July last year, says the monthly report from the Canadian Real Estate Association (CREA).

This reflects fewer sales in major urban centres in British Columbia and an offsetting improvement in activity in the GTA.

“This year’s new stress test on mortgage applicants continues to weigh on home sales, but its effect may be starting to fade slightly in Toronto and nearby markets,” says CREA president Barb Sukkau. “The degree to which the stress test continues to sideline home buyers varies depending on location, housing type and price range.”

Improving national home sales activity in recent months obscures significant differences in regional trends for home sales and prices, according to Gregory Klump, CREA’s chief economist.

“Regardless, rising interest rates and this year’s stress test on mortgage applicants will likely prove to be difficult hurdles to overcome for many would-be first time and move-up home buyers, heading into the second half of the year and beyond,” says Klump.

New listings fell 1.2 percent in July, below monthly levels recorded over most of the past eight years. New listings were down in more than half of all local markets, led by Calgary, Edmonton and Greater Vancouver (GVA). Fewer new listings in these markets more than offset an increase in new supply in the GTA.

In the 15 housing markets tracked by CREA, eight recorded price increases from a year ago, with little changed in two markets and down in the remainder.

On the Prairies, benchmark home prices remained down on a year-over-year basis in Calgary (-1.7 percent), Edmonton (-1.3 percent), Regina (-4.8 percent) and Saskatoon (-2.1 percent).

Provided by: Myke Thomas for the Province