TORONTO - The Canadian Real Estate Association is predicting that the impact of declining oil prices on consumer confidence in some provinces will push down Canadian home sales by 1.1 per cent this year, to 475,700 units countrywide.
CREA also estimates the national average home price will grow by two per cent to $416,200 this year, a smaller increase than last year, as Alberta's average home prices slip by an estimated 3.4 per cent this year to $387,600.
The association had earlier predicted home sales would be 0.8 per cent above 2014, rising to 485,200 units, but revised its outlook lower to reflect the falling price of oil.
Provinces with significant oil production will see lower home sales. Alberta is expected to see sales fall by 19.3 per cent in 2015, Saskatchewan by 11.2 per cent, Manitoba by 2.2 per cent and Newfoundland by one per cent.
However, RBC Economist Robert Hogue said the oil price-related turbulence in Western Canada looks like it may subside soon.
"It is encouraging to see possible signs that the worst may soon be over in Calgary and Saskatchewan," Hogue said in a note. "In particular, we point to the drop in new listings in these markets as a positive development that, if sustained, would suggest to us that panic is not setting in and that activity may be close to reaching a floor."
Canada's other provinces will continue to see higher sales and relatively stable or higher average sales prices, according to CREA.
British Columbia is projected to see the number of home sales increase by 4.9 per cent, Nova Scotia by 3.7 per cent and Quebec and New Brunswick by 2.5 per cent.
Ontario is expected to see a 1.9 per cent boost in sales levels from 2014, while Prince Edward Island is projected to see sales activity rise by 1.4 per cent.
The B.C. average home price is expected to rise 3.4 per cent this year over 2014 to $587,600 and Ontario's average price will grow 2.5 per cent to $441,900. Apart from those two provinces and Alberta, prices elsewhere are expected to be within one per cent of last year.
TD Economist Diana Petramala said although rock-bottom interest rates will fuel housing demand over the short term, "the impact is likely to fade as 2015 unfolds." Overall, Petramala predicts sales will remain relatively flat over the course of the year and price growth will slow down to about one to two per cent.
"A stable housing market means the Bank of Canada will be in no rush to raise or lower interest rates over the near term," Petramala said in a note.
Meanwhile, home sales in February were up one per cent from January after several months of back-to-back declines, though the picture was dramatically different in various regions.
The overall increase was led by the Vancouver and Okanagan regions in B.C. and Toronto. However, CREA said sales were lower in more than half of all local markets compared with January as buyers on the Prairies stayed on the sidelines amid low oil prices.
Compared with a year ago, sales last month were up 2.7 per cent from February 2014.
The number of newly listed homes fell 2.5 per cent in February compared to January.
The national average price for a home sold in February was $431,812, up 6.3 per cent on a year-over-year basis.