Canada Home Sales Drop After Hikes
The Canadian housing market has seen a drop in sales for the first time in six months, following a series of hikes in mortgage rates. The decline in sales is a sign that the market is cooling off after a period of rapid growth.
Mortgage Rates on the Rise
Mortgage rates in Canada have been on the rise since the beginning of the year. The Bank of Canada has raised its benchmark rate three times since January, and the average five-year fixed mortgage rate has risen from 2.99% to 3.49%. The increase in rates has made it more expensive for Canadians to borrow money to buy a home.
Sales Decline in August
According to the Canadian Real Estate Association (CREA), home sales in Canada fell by 4.6% in August compared to the previous month. This is the first decline in sales since February. The decline was led by a drop in sales in the Greater Toronto Area (GTA), which saw a 7.2% decline in sales compared to the previous month.
Prices Remain High
Despite the decline in sales, home prices in Canada remain high. The average price of a home in Canada rose by 8.2% in August compared to the same month last year. The GTA saw the biggest increase in prices, with an 11.2% year-over-year increase.
Supply and Demand
The decline in sales is likely due to a combination of factors, including the rise in mortgage rates and a decrease in the number of homes available for sale. The number of homes listed for sale in Canada fell by 8.3% in August compared to the same month last year. This decrease in supply has led to an increase in prices as buyers compete for a limited number of homes.
Impact on the Market
The decline in sales is a sign that the Canadian housing market is cooling off after a period of rapid growth. The rise in mortgage rates has made it more expensive for Canadians to borrow money to buy a home, and the decrease in the number of homes available for sale has led to an increase in prices.
Outlook for the Future
It remains to be seen how the Canadian housing market will fare in the coming months. The Bank of Canada is expected to keep its benchmark rate steady for the rest of the year, which could help to stabilize the market. However, the decrease in the number of homes available for sale could continue to put upward pressure on prices.
Overall, the decline in sales is a sign that the Canadian housing market is cooling off after a period of rapid growth. The rise in mortgage rates and decrease in the number of homes available for sale have both contributed to the decline in sales. It remains to be seen how the market will fare in the coming months, but the Bank of Canada’s decision to keep its benchmark rate steady could help to stabilize the market.