MLS® resale housing market stabilizes further in March

Existing MLS® home sales activity increased for the second month in a row in March 2009, according to statistics released by The Canadian Real Estate Association (CREA). The number of new listings also continued trending lower in March, which firmed up the balance of supply to demand.

A seasonally adjusted total of 31,135 homes traded hands nationally via the Multiple Listing Service® (MLS®) in March 2009. This is an increase of seven per cent from the previous month, and builds on the 10.3 per cent activity gain in February. The number of transactions in March 2009 stands 18 per cent above levels reported in January 2009, when activity sank to the lowest level in a decade.

The monthly increase in activity was largest in British Columbia (13.6 per cent), and Ontario (10.5 per cent). Sales were also up from February levels in Manitoba, Quebec, and Newfoundland & Labrador.

Actual (not seasonally adjusted) transactions numbered 35,225 units in March 2009. While this remains 13.7 per cent below levels reported in March 2008, it is the smallest year-over-year decline in six months.

The national average price for home sales via the MLS® remains below levels reached one year earlier, but year-over-year declines are shrinking. The MLS® average residential price for homes sold in March 2009 was $288,641, down 7.7 per cent from March 2008. This is the smallest year-over-year decline in six months.

The average price for homes sold via the MLS® set a new record in March 2009 in Manitoba, and remained above year-ago levels in Saskatchewan, Quebec, New Brunswick, Prince Edward Island, and Newfoundland & Labrador.

The national average price continues to be skewed downward by lower activity in some of Canada’s more expensive housing markets and by fewer transactions at the higher end of the price spectrum. British Columbia, Alberta and Ontario, where homes are more expensive, are significant contributors to the current downward trend in national average price. MLS® home sales activity in these provinces accounted for 69 per cent of national activity in March 2008, compared to 67 per cent in March 2009.

The price trend is less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was down 4.7 per cent year-over-year in March, compared to a 5.1 per cent decline in February.

“Housing markets are starting to show signs of buyer interest because of lower prices and interest rates,” says Dale Ripplinger, President of The Canadian Real Estate Association. “We expect April sales activity will feel some effects from the federal government incentives announced in the last budget, including the increase in the maximum withdrawal allowed under the Home Buyers’ Plan, and the First Time Buyer Tax Credit.”

Seasonally MLS® adjusted MLS® sales activity in the first quarter of 2009 was little changed compared to the fourth quarter of 2008, declining by less than one-tenth of a per cent. The number of homes for sale remains high, but continues trending downward. Seasonally adjusted national MLS® residential new listings numbered 208,755 units in the first quarter of 2009. This is down 6.4 per cent from the previous quarter, and represents the third consecutive quarter-over-quarter decline. On a seasonally adjusted basis, the number of MLS® residential new listings has dropped 11.9 per cent from the peak reached in the second quarter of 2008.

With sales activity increasing and new listings trending lower, the balance between supply and demand is firming up in British Columbia, Alberta, Ontario, and Quebec. These provinces have the largest influence on the national housing picture, so a firming housing market balance there in March 2009 caused the national housing market balance to tighten for the fourth time in as many months.

“A number of major housing markets are stabilizing, as buyers respond to improving affordability,” said CREA Chief Economist Gregory Klump. “Looking back to economic recessions in the early 1980s and 1990s, national resale housing activity bottomed out before the job market or economy did,” said Klump. “It will take time for ample supplies of new and existing homes to be drawn down, but demand appears to be stabilizing.” (CREA 15/04/09)