National home sales gaining momentum entering second half of 2009

National resale housing market activity bounced back strongly in the second quarter of 2009 above levels reported for the same period last year, according to the Canadian Real Estate Association. 

Demand continues to rebound sharply in some of the most expensive markets in the country, skewing the national average price upward.

According to statistics released by CREA, actual — not seasonally adjusted — home sales, via MLS® of Canadian real estate boards, totaled 147,351 units in the second quarter of 2009, which is the fourth strongest quarterly sales figure ever.

“Potential buyers who moved to the sidelines late last year when economic uncertainty peaked are returning to the housing market now that the worst of the recession may be behind us,” said CREA president Dale Ripplinger.

The Conference Board of Canada has released a new report confirming the worst is over, with the Canadian economy expected to begin growing in the second half of this year, although at a modest rate.

WinnipegREALTORS® president Deborah Goodfellow said improved sales figures have shown a return of home buyer “enthusiasm” in the local real estate market.

While overall year-to-date sales and dollar volume has declined slightly, Goodfellow said, “June resulted in one of Winnipeg’s best real estate months ever and that in part was due to consumers regaining their enthusiam for Winnipeg real estate opportunities.”

Actually, dollar sales reached $311 million in June, which is only  the third time when monthly dollar volume surpassed $300 million in the 106-year history of WinnipegREALTORS®.

June sales in Winnipeg were the third best on record and were only topped by the same month in 2007 and 2008, but only by five per cent.

Up 1.4 per cent from the second quarter of 2008, this marks the first year-over-year national increase in quarterly activity since the fourth quarter of 2007.

“Sales momentum remains strong going into the second half of 2009,” said Ripplinger. “Chances are good that the number of transactions in the second half of 2009 will surpass levels in the first half of the year.”

On a seasonally-adjusted basis, national MLS® home sales numbered 114,173 units in the second quarter, jumping up a record 31.5 per cent from the first quarter of 2009.

Seasonally-adjusted resale activity in the second quarter was up from the previous quarter in about 85 per cent of local markets. Quarterly activity increases in Toronto (45 per cent), Vancouver (77 per cent), Montreal (33 per cent), Calgary (66 per cent) and Edmonton (39 per cent) contributed most to the national increase in activity.

Strong upward momentum for monthly sales activity was sustained throughout the second quarter. June marked the fifth consecutive month in which activity was up from previous months’ levels. 

Some 41,304 homes traded hands via the MLS® of real estate boards in Canada on a seasonally-adjusted basis in June 2009. This is up 8.7 per cent from May and represents the first time since January 2008 that monthly activity topped 40,000 units.

Actual home sales climbed 17.9 per cent year-over-year to 54,616 units in June 2009. This is on par with the record for the month of June set in 2007 and is the fourth highest level for activity in any month on record.

The national MLS® residential average sale price reached the highest quarterly level ever in the second quarter of 2009. At $318,696, the average sale price was up half a per cent from the previous record set in the second quarter of 2008.

In Winnipeg, the average price of a detached bungalow increased by 1.7 per cent to $237,750.

“Our house prices remain affordable, especially in this low-interest rate environment and with a better supply of listings available than was the case over the last few years,” said Goodfellow.

The national average home price also scaled new heights on a monthly basis, climbing 3.6 per cent year-over-year to $326,613 in June 2009. However, only 13 local markets posted new average price records in June, less than a handful of which are among the most active or expensive. 

The strong rebound in sales activity, not price, in Canada’s most expensive markets is skewing average prices upward nationally and in some provinces, just as a sharp decline in activity in these markets skewed the average lower in late 2008.

While the number of listings has increased in the Winnipeg market area, CREA said the national supply of homes coming onto the market continued retreating in the second quarter. Seasonally-adjusted MLS® residential new listings were down 16.9 per cent from the previous quarter to 197,049 units, the lowest level since the fourth quarter of 2005.

Nationally, the number of months of inventory was 4.2 months in June 2009. This is the lowest level since August 2007, and well down from the recessionary peak of 12.8 months in January 2009. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. 

The residential dollar volume for MLS® sales jumped 40.6 per cent on a seasonally-adjusted quarter-over-quarter basis in the second quarter of 2009, to reach $34.8 billion.    

“Low interest rates have improved the affordability of homeownership, as have price adjustments in housing markets that previously experienced rapid price increases,” said CREA chief economist Gregory Klump. “Housing markets where negotiations recently favoured the buyer have become more balanced and the stage is being set for modest price appreciation as inventories are drawn down by sales.”