The Canadian Real Estate Association says the average price for a home sold last month fell to $488,000, down 2.9 per cent compared with November 2017. (iStock)

Home sales go up in June but remain well below last year’s levels

Home sales across Canada rose by 4.1 per cent in June compared to May, suggesting the housing market is starting to lift from the cooling effect of the new federally mandated stress-test on mortgage applicants, according to the organization that represents real estate brokers.

The slight bump in home sales in June marked the first increase this year, but sales remained well below monthly levels recorded over the last five years, according to the latest report by the Canadian Real Estate Association (CREA).

Home sales in June were down almost 11 per cent compared to a year ago, the report said.

Except for British Columbia, where home sales continue to slump, more than 60 per cent of all housing markets across Canada reported increased sales activity in June compared to May, led by the Greater Toronto Area (GTA), the CREA report said Monday.

Interest rates expected to continue going up

“This year’s new stress-test on mortgage applicants has been weighing on homes sales activity; however, the increase in June suggests its impact may be starting to lift,” said CREA President Barb Sukkau.

However, the extent to which the stress-test continues to sideline home buyers varies by housing market and price range, Sukkau added.

“The number of homes trading hands has a long way to go before it returns to levels posted in recent years,” said, Gregory Klump, CREA’s Chief Economist.

“Looking ahead, home sales activity and price gains will likely be held in check by higher interest rates.”

A careful reading of last week’s comments by Bank of Canada governor Stephen Poloz suggests that despite the uncertainty created by the trade war with the United States, Canada’s largest trading partner, the central bank is moving in the direction of hiking interest rates even further.

The national average price for homes sold in June 2018 was just under $496,000, down 1.3 per cent from one year earlier.

However, the national average price is heavily skewed by sales in the Greater Vancouver and GTA, two of Canada’s hottest and most expensive markets. Excluding these two markets from calculations cuts almost $107,000 from the national average price to just over $389,000.

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