Some economists are calling it a “soft landing,” because sales volumes have fallen and aren’t coming back up, but house prices in Canada showed no signs of easing up in February.
Prices for sales of previously owned homes jumped 10.1 per cent in the year to February, the Canadian Real Estate Association (CREA) reported Monday.
The average price for a re-sold house in Canada in February was $406,372, up from around $368,000 in February of last year.
But CREA trimmed its sales forecast for the rest of the year, noting that a slump in sales volumes isn’t showing signs of rebound. It now expects 463,000 sales this year, compared to 475,000 forecast in its December outlook.
TD economist Diana Petramala noted that the number of sales is down 9.3 per cent from its peak last August, and picked up by just 0.3 per cent in February.
Those are “signs of a soft landing,” Petramala wrote in a client note.
House price changes for select cities, in the three years to February (story continues below):
“The performance of Canada's housing market over the last few months is largely reflective of a cooling in Canadian housing demand. Sales are moving at a pace that is neither too hot, nor too cold,” Petramala wrote.
She noted that the one thing that hasn’t happened is a slowing in house price growth, “but that too will likely come.” She says house prices are rising because of a shortage of supply in some cities, but that will be solved as new homes come online.
But she suggested prices of single-family homes could still keep going up.
“Most of the overbuilding occurred in the multi-unit segment of the market and will likely not help alleviate some of the supply constraints building in the more popular single-family home market,” Petramala wrote.
— With files from the Canadian Press