A new report from the Canadian Real Estate Association (CREA) shows a decline in home sales activity in May – historically one of the busiest months for real estate sales in Canada.
Several factors spurred home buying activity in previous months to near record levels, including a rebounding economy, warnings of interest rate hikes by the Bank of Canada, the impending HST and new mortgage rules.
According to Multiple Listing Service® data, seasonally adjusted home sales activity in May was down 9.5 percent from April. Declines in sales in Vancouver, Toronto and Ottawa had a marked influence on the national total.
CREA Chief Economist Gregory Klump believes that the frenzied rush to enter the housing market has come to an end and property seekers are taking more time to make decisions. He expects homes listed for sale in the coming months to remain on the market longer.
In related news, the Bank of Canada isn’t letting on if it will impose another interest rate increase on July 20. In an appearance this week in Charlottetown, Bank of Canada Governor Mark Carney was coy about his next move, suggesting that the world economy is still too volatile to make an interest rate hike a certainty.
The Bottom Line
With housing prices on the way down, inventory on the way up and mortgage rate increases not a given, it looks like Canadians who resisted the rush to buy in the first half of 2010 might now be driving the bus.