Home sales in Canada during the month of April fell to a seven-year low as the typically busy spring real estate season began, the Canadian Real Estate Association (CREA) reported Tuesday.
According to CREA, both sales and prices saw double-digit annual declines in April. Sales sank 13.9% year-over-year and the national average sale price dropped by 11.3% year-over-year to just over $495,000. But excluding large declines in the pricey Vancouver and Toronto markets, the national average price was down 4.1% to $386,100. Overall sales sank 13.9% year-over-year and the national average sale price dropped by 11.3% year-over-year to just over $495,000.
Home sales also fell 2.9% between March and April, bringing the total number of sales to 36,297. Listings with CREA members fell by 4.8% to 67,616 — a nine-year low for the month. CREA said the declines are a sign that the flurry of home sale activity that usually kicks off the spring real estate market didn’t materialize this April. The large decline in new listings has also helped to keep 60% of local markets in a balance between buyers and sellers.
CREA, which represents 100,000 real-estate agents across Canada, attributed the poor April performance to a new mortgage stress test that came into effect at the beginning of this year. The organization has been critical of government intervention in the housing market at both the federal and provincial levels.
Policymakers at the Bank of Canada and the federal banking regulator have said the new stress test is intended to reduce the risk of mortgage defaults if interest rates go up. As of January 1, the Office of the Superintendent of Financial Institutions (OSFI) requires buyers who don’t need mortgage insurance to prove they can make payments at a qualifying rate of the greater of two percentage points higher than the contractual mortgage rate or the central bank’s five-year benchmark rate.
