Canadian home sales nationwide dropped 16.9% in February from a year ago, reaching their lowest level in five years according to the latest report issued by the Canadian Real Estate Association (CREA).
The latest monthly figures from CREA showed that home sales volumes in Canada were down 16.9% in February compared with a year earlier, and down 6.5% compared with January of this year. February’s home sales decline marked the second consecutive month-over-month decline and the lowest reading in nearly five years, said the national association.
“The drop off in sales activity following the record-breaking peak late last year confirms that many homebuyers moved purchase decisions forward late last year before tighter mortgage rules took effect in January,” said Gregory Klump, CREA’s Chief Economist in a news release.
Canada’s federal banking regulator’s tougher rules, which took effect on January 1, now require a stress test to be applied even to borrowers with more than a 20% down payment. To qualify for federally regulated mortgages, borrowers must be able to afford interest rates that are two percentage points above the contracted rate or the Bank of Canada’s five-year benchmark rate, whichever is higher.
The stricter residential mortgage lending regulations introduced by the Office of the Superintendent of Financial Institutions were aimed at reducing risk in the market amid high housing prices.
CREA’s latest monthly statistics show that home sales were down in February in almost three quarters of all local housing markets tracked by the national association. The national average house price for homes sold in February was just over $494,000, down 5% from a year earlier. But excluding Toronto and Vancouver, the country’s most active and most expensive markets, the national average price was just under $382,000, up 3.3% from $369,728 a year ago.
The number of newly listed homes in February increased by 8.1%, following a plunge of more than 20% in the previous month. However, new listings across the country in February were still 6.4% below the 10-year monthly average and 14.6% below the peak reached in December 2017. New home listings in February were also below the levels recorded every month last year except January 2017.