Canadian home sales in October ticked higher compared with September, the third consecutive monthly increase.
The Canadian Real Estate Association said Wednesday the number of homes sold through its MLS system in October was up 0.9 per cent from the previous month, led by the Toronto region and the Fraser Valley in B.C.
TD Bank senior economist Michael Dolega said the report corroborates the notion that the Canadian housing market continues to manoeuvre a soft landing.
“Markets in Ontario remain vulnerable given affordability issues and lingering uncertainty regarding policies, but it would appear that the worst is behind the province, with some stability likely in store in the near- to medium-term,” Dolega wrote in a note to clients.
The increase in sales came as the number of newly listed homes slipped 0.8 per cent in October following a jump of more than five per cent in September.
The national sales-to-new listings ratio rose to 56.7 per cent in October from 55.7 per cent in September. CREA said a national sales-to-new listings ratio of between 40 per cent and 60 per cent is generally consistent with a balanced market.
Compared with a year ago, the number of homes sold in October fell 4.3 per cent.
The national average price for a home sold in October was $505,937, up five per cent from a year ago. Excluding Greater Vancouver and Greater Toronto, the average price was just over $383,000.
Home sales in Canada hit a fevered pitch in the spring of 2017 before the Ontario government moved to cool the market in and around Toronto with the introduction of a package of measures including a tax on foreign buyers like the one put in place last year in Vancouver.
The market has also seen two rate increases by the Bank of Canada that have prompted an increase in the prime lending rates at the country’s big banks, with stricter lending rules set to come into place next year.
CIBC deputy chief economist Benjamin Tal said the combination of higher interest rates and regulatory changes will work to reduce purchasing power, but the impact will probably be short-lived.
“The level of activity is likely to stabilize and perhaps soften in the coming quarters as markets adjust to recent and upcoming regulatory changes,” Tal wrote in a report.
“But when the fog clears it will become evident that the long-term trajectory of the market will show even tighter conditions. The supply issues facing centres such as Toronto and Vancouver will worsen and demand is routinely understated.”
Tal said that without significant change in housing policies and preferences, there is nothing in the pipeline to alleviate the pressure.