TD Economics notes rising Canadian home sales and declares market “correction likely over”

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      Are the good times back for Canadian real estate?

      A commentary by TD Economics notes that following five straight months of decline, home sales increased last September.

      Economist Rishi Sondhi also pointed out that this increase was accompanied by a growth in prices.

      This could mean one thing.

      “The correction in sales from the unsustainable levels achieved earlier in the year is likely over, and September should mark the beginning of a modest positive trend in sales activity,” Sondhi wrote in the commentary Friday (October 15).

      But don’t pop the bubbly just yet.

      “The key word here is modest, as interest rates are likely to grind higher moving forward, playing off against improving job markets, a rising population, and the decision by some households to plow excess savings into down payments,” Sondhi noted.

      The TD economist observed that existing home sales increased month-over-month in September by 0.9 percent, totalling a “healthy” 48,900 units.

      It was the first increase in six months.

      Newfoundland and Labrador had an 18.2 percent monthly increase; New Brunswick, 10.1 percent; Ontario, two percent; Quebec, Quebec, 1.9 percent; and Alberta, 0.8 percent.

      However, sales “dropped by a significant amount” in Prince Edward Island, -14.4 percent; Saskatchewan, -3.7%; and B.C., -1.9 percent.

      Sondhi noted that new home listings fell by 1.6 percent month-over-month in September.

      “Combined with the sales increase, markets got tighter during the month,” the bank economist wrote.

      As a result, the sales-to-new-listings ratio tightened to 75.1 percent from the previous month’s level of 73.2 percent.

      Meanwhile, Canadian average home prices “climbed a sturdy” 1.2 percent month-over-month in September.

      New Brunswick recorded a 5.5 percent increase in average price; Ontario, 2.2 percent; Quebec, 0.5 percent; B.C., 0.2 percent, and Alberta, 0.1 percent.

      However, Saskatchewan and Manitoba saw average price declines of -2.1 percent and -1.2 percent, respectively.

      So what’s to expect ahead?

      “Moving forward,” Sondhi wrote, “average prices should display stronger growth than sales (despite lower-valued condos consuming a rising share of activity) as markets remain drum tight.”