The Canadian Real Estate Association (CREA) has downgraded by 5% its national outlook for home sales activity for the remainder of 2017, citing weaker than expected demand in Ontario, Canada’s most populous province.
In a news release, CREA said that it's now forecasting sales activity through the Multiple Listing Service (MLS) will come in at 506,900 units in 2017, a drop of more than 20,000 transactions from its previous forecast in June.
“Sales in British Columbia and Ontario are both now projected to decline by about 10% in 2017 compared to all-time records set in 2016," CREA said in its report.
Oil rich Alberta is still projected to post the largest provincial increase in resale activity in 2017, with a gain of 7.4%, but that will still leave sales below that province's 10-year average. CREA also said the national average price for house resale transactions is forecast to rise by 3.4% this year to $506,700. That too is a downward revision to CREA's previous forecast of $526,000, mostly due to fewer high-priced sales in Ontario's Greater Golden Horseshoe region that runs between Toronto and Niagara.
Changes in sales activity in the Greater Golden Horseshoe influence results for Ontario and nationally because the region is home to roughly a quarter of the Canadian population, CREA said.
The latest sales report by CREA follows the Bank of Canada’s decision last week to further raise lending rates. Rising interest rates could further cool house sales in Canada, say economists and housing sector analysts.
“Experience shows that homebuyers watch mortgage rates carefully and that recent interest rate increases will prompt some to make an offer before rates move higher, while moving others to the sidelines,” said CREA President Andrew Peck in the news release.
