National MLS® housing market more balanced in the first quarter

National MLS® resale housing activity declined in the first quarter of 2008 compared to the previous quarter while new listings reached their highest quarterly level ever, according to statistics released by The Canadian Real Estate Association (CREA). The result was the most balanced resale housing market of any quarter in the past nine years.

Seasonally adjusted national MLS® sales activity declined 6.8 per cent to 117,051 units in the first quarter of 2008 compared to the fourth highest level on record, reached the previous quarter. It was the third consecutive quarterly decline since activity peaked in the second quarter last year.

Much of the decline in activity resulted from fewer transactions in Toronto during February and March. Sales activity in Toronto accounts for almost one fifth of all existing home sales in Canada. Fewer sales in British Columbia were also responsible for a significant share of the national decline in the first quarter.

Regional variations in the trend for sales activity persist. Seasonally adjusted sales activity set a new quarterly record in Saskatchewan, and quarterly transactions reached their second highest level ever in Newfoundland & Labrador.

Some 38,128 properties traded hands via the MLS® on a seasonally adjusted basis in March 2008, down just 0.4 per cent from levels recorded in February.

The number of MLS® residential new listings reached the highest quarterly level ever in the first quarter. A seasonally adjusted total of 223,405 homes were listed on the MLS® systems of local real estate boards in the first three months of 2008, a 5.5 per cent increase over the fourth quarter last year.

New listings surged on a quarter-over-quarter basis in Alberta and British Columbia, reaching new heights in both provinces. The rise in new listings in these provinces more than offset a quarterly decline in newly listings in Toronto.

The quarterly jump in MLS® residential new listings and the decline in sales activity made the national resale housing market more balanced in the first quarter of 2008 than during any other quarter in nine years. The MLS® housing market became more balanced in every province except Saskatchewan. The market in Alberta remains the most balanced in the country, while sellers’ markets persist in Saskatchewan and Manitoba.

“It is also important to remember that 2007 was another record year for MLS® residential property sales in Canada,” notes CREA President Cal Lindberg. “Any comparisons with last year means comparing with a record year. What the statistics indicate is that the residential housing market is easing back towards more historically typical levels.” The national MLS® residential average price climbed 6.4 per cent year-over-year to $312,583 in the first quarter 2008. This is the smallest year-over-year price increase since the fourth quarter of 2001, reflecting a more balanced market.

Price gains did not become more modest in all provinces. In Manitoba and Newfoundland & Labrador, MLS® residential average price posted the biggest year-over-year increase ever in the first quarter of 2008.

In March, the MLS® residential average price was $314,279. That‘s a 4.8 per cent increase year-over-year – the smallest increase since October 2001.

Seasonally adjusted MLS® residential dollar volume was valued at $37 billion in the first quarter of 2008, down 7.7 per cent from the previous quarter. Dollar volume reached its highest level on record in Saskatchewan, Manitoba and Prince Edward Island, and posted its second highest level in Newfoundland & Labrador.

“Resale housing activity is trending lower in the four most active provinces,” said CREA Chief Economist Gregory Klump. “Housing markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue, as rising mortgage carrying costs and property taxes erode affordability,” he added.

“The credit crunch has had limited impact on Canadian mortgage lending to date. Resale housing activity will continue to be supported by rising after-tax incomes, high employment, and declining interest rates,” said Klump. (CREA 30/04/08)