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Canadian home sales drop for fourth month as Lower Mainland weighs on activity

Last Updated Sep 15, 2016 at 1:40 pm EDT

A for sale sign displays a sold home in a development, in Ottawa, on July 6, 2015. The Canadian Real Estate Association says home sales dropped 3.1 per cent in August from July for the fourth straight monthly decline. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA – The Canadian Real Estate Association says national home sales dropped 3.1 per cent in August from July for the fourth straight monthly decline, as some markets have started to slow dramatically.

The association said Thursday that much of the downward movement reflects the slowing activity in British Columbia’s Lower Mainland, where a foreign-buyer tax introduced last month contributed to an 18.6-per-cent drop in activity from a month earlier.

The monthly drop helped lead to a 24.5-per-cent year-over-year activity decline in Vancouver, and further split it from the trend in Toronto — where activity climbed two per cent in the month and is up 22.7 per cent from a year earlier.

“Vancouver has gone cold, while Toronto is heating up to a rolling boil,” said Robert Kavcic of BMO Capital Markets in an analyst note.

The swing in activity led CREA to also revise down expected B.C. sales because Lower Mainland activity has “braked more abruptly than anticipated,” while increasing the forecast in Ontario where sales “have yet to show signs of cooling.”

The association now expects B.C. to see a 14.6-per-cent increase in activity this year, down from the 20 per cent it forecast in June. Ontario activity is expected to increase 7.1 per cent, despite constrained supply, up from an expected 5.2 per cent.

The swings in the two markets largely balanced out the national figures, which are still expected to see sales increase by about six per cent this year to 535,900 units for a record high if population growth isn’t factored in.

That annual increase is anticipated despite recent numbers trending down, with national sales activity now 6.9 per cent below the record set in April. Compared to a year earlier, activity was still up 10.2 per cent.

Housing prices were up from a year ago, with the average price of a home sold in August at $456,722, up 5.4 per cent from a year earlier. However, CREA said it was the smallest increase since January 2015.

Excluding Greater Vancouver and Greater Toronto, the average price of a home sold in August was $357,033.

CREA’s MLS home price index was up 14.7 per cent year over year as Vancouver and Toronto also pulled up the average.

With the decline in August, national sales have dropped 6.9 per cent below the record set in April, but were still 10.2 per cent above August 2015.

Along with lower sales, the number of newly listed homes dropped by 2.7 per cent in August compared with July, to keep the sales-to-new-listings ratio at what’s considered a sellers market at about 62 per cent.