More than half a million homes sold via MLS® in 2007

National MLS® resale housing activity, new listings, average price and dollar volume all reached their highest annual levels ever in 2007, according to statistics released by The Canadian Real Estate Association (CREA).

Annual sales activity totaled 520,747 units in 2007, up 7.6 per cent from 2006 levels. This was the largest annual sales growth since 2002, and the first time transactions via the MLS® systems of real estate boards in Canada have surpassed 500,000 units sold in one year.

MLS® sales activity set new annual records in Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. Saskatchewan posted the biggest annual increases in activity, up 31.9 per cent from 2006. Activity also rose 26.4 per cent in Newfoundland and Labrador, and climbed 18.6 per cent in Prince Edward Island.

“The results in 2007 show the strength and the affordability of the Canadian residential market,” says CREA President Ann Bosley. “The Bank of Canada may have cut interest rates on January 22nd because of weaker prospects for Canadian economic growth in 2008, but those lower interest rates will also help temper any erosion in housing affordability in Canada because of additional home price increases,” Bosley added.

“The challenge for the Canadian housing market will be the extent to which consumer confidence is affected by a slowdown in the U.S. economy,” the CREA President said.

Seasonally adjusted sales activity peaked in the second quarter. National activity has receded since then but it remains strong, having posted its four highest quarterly levels on record in 2007.

Fourth quarter national sales activity numbered 125,797 units, the fourth highest seasonally adjusted level on record. This is a three per cent decline from the third quarter, and resulted largely from quarterly declines in activity in British Columbia, Ontario and Alberta.

In contrast to the national trend, seasonally adjusted sales activity in Newfoundland and Labrador jumped 15.3 per cent quarter-over-quarter in the fourth quarter of 2007 and set a new quarterly record. Activity also reached the second highest quarterly level ever in Prince Edward Island, and the third highest quarterly levels ever in Saskatchewan and Ontario in the fourth quarter.

On a monthly basis, in December 2007 sales edged lower by 3.5 per cent from the previous month to 41,079 units. Activity posted month-over-month declines in every province except New Brunswick. The monthly trend for sales activity in December was strongest in Newfoundland and Labrador, with transactions there reaching their second highest seasonally adjusted level ever.

The national MLS® residential average price continues to climb. It set a new annual record in 2007, rising 11.0 per cent. In the fourth quarter, it rose 12.1 per cent year-over-year to $314,591. On a monthly basis, average price rose 14.1 per cent year-over-year to $317,825 in December – a new record, and the largest year-over-year price increase in almost 20 years.

MLS® residential new listings also set a new annual record in 2007. A total of 845,954 homes were listed via the MLS® systems of real estate boards in Canada last year, up 5.5 per cent from 2006 levels.

Sales rose more than new listings in 2007. This caused the national MLS® market to tighten marginally compared to the previous year, but the market was more balanced in 2007 than in each of the years from 2001 to 2005.

MLS® residential dollar volume rose 19.4 per cent annually to $160 billion in 2007, the highest level on record. MLS® dollar volume set new annual records in every province last year.

“Condo unit sales as a proportion of total activity continue rising in larger markets,” said CREA Chief Economist Gregory Klump. “Condo prices continue rising. Since condos are and will continue to be more affordable than single family homes, they will continue becoming an increasingly significant housing market segment.”

“The Bank of Canada will continue cutting its trend-setting interest rate for two reasons,” said Klump. “One is that slowing U.S. economic growth will cause Canadian economic growth and inflation to ease. The second is that financial market liquidity is needed in the aftermath of the subprime meltdown.“

“Slower job growth, not massive layoffs, are forecast for Canada in 2008,” Klump added. “With slower job growth, a low unemployment rate and the absence of widespread layoffs in Canada, consumer confidence will prove to be resilient. The domestic economy and the housing market will weather the sub-prime fallout with the help of lower interest rates”. (CREA 28/01/08)