Regional home sales were mixed in August, but a stronger pickup in the Lower Mainland lifted B.C. sales to a multi-year high, following a July dip. According to the latest Canadian Real Estate Association (CREA) data, provincial Multiple Listing Service (MLS) sales climbed 2.5% from July to a seasonally adjusted 7,215 units, which was the strongest pace of monthly sales since early 2011, but remained generally in line with levels observed since May. Outside the Lower Mainland, sales declined 2% as fewer sales on Vancouver Island (excluding Victoria), in the South Okanagan and in the north offset gains in the remaining markets.
Despite the mixed monthly performance, August’s numbers point to solid housing demand that is well ahead of last year’s level in most provincial markets. While there are pockets of weakness, provincial sales were up 7% from the same month in 2013, led by the Lower Mainland and a more than 20% gain in the Okanagan and Chilliwack areas. Year-over-year growth is generally decelerating due to a rising sales trend in the back half of 2013, but year-to-date gains remained high at 16%.
Housing market momentum has persisted despite a sluggish labour market as low mortgage rates and signs of recovery in recreational housing have fuelled activity. While mortgage rates have stayed low for longer than expected, we expect momentum to moderate as rates pull off their lows. Mortgage rates will continue to prop up sales but should not be the primary contributor to growth. The positive sales trend has lifted activity to modest levels. While shy of levels observed in the mid-2000s, demand and supply conditions have tightened. Existing home inventory has fallen over the past two years and is at the lowest since 2010.
The average provincial MLS price reached a seasonally adjusted $575,600 in August, marking a 1.9% increase from July and a 4.7% increase from the same month in 2013. Average prices are influenced by geographic sales composition, but most regions have experienced modest price appreciation over the past year.
MLS sales are forecast to rise 10% to 80,000 units this year, while the average annual price gains 5% to $566,000. Sales are forecast to rise a further 5% next year, with the average price increasing by a mild 1%. •
