TORONTO - Resale home prices and sales slid in Canada's major markets last month, while listings roared ahead, more signs the market is weakening, according to a Canadian Real Estate Association report.
Rising consumer caution due to a slowing economy, especially in Ontario and Quebec, prompted nearly an 11 per cent drop in existing homes sales compared to the same period in 2007, according to CREA's Multiple Listing Services figures for July.
"The steady drum-beat of double-digit sales declines this year is beginning to weight more heavily on prices," Doug Porter, deputy chief economist at BMO Nesbitt Burns Inc., said Thursday in a research note to clients.
CREA said the average existing home price fell by 3.6 per cent in July over the same month last year, a continuation of a price decline that began in June when the average price slipped by 0.4 per cent, the first decline in more than nine years.
At the end of July, the average price of a resale home was $327,020, down from $339,277 in July 2007, the MLS figures showed.
"Canada's housing market is running into some seriously foul weather amid the weakest affordability in nearly two decades," said Porter.
He said BMO played down the price decline in June because it was so narrowly based.
"However, the drop in July spread to a few more cities, including the previously untouchable Vancouver market."
Canadians have become more cautious consumers, shying away from big ticket purchases such as houses, as the economy slows in face of the slowdown in the United States, brought on by the worldwide credit crunch.
Canada's export-sensitive forestry and automotive industries have been savaged by weaker consumer spending in the United States and loss of their cost advantage with the stronger loonie, leading to announcements of thousands of layoffs.
Softening commodity prices, especially for oil, are also creating uncertainty in the marketplace.
The national economy lost 55,000 jobs in July, with Ontario and Quebec, the country's two most populous provinces and the centre of the manufacturing sector, the hardest hit.
Statistics Canada said Friday the national unemployment rate improved slightly to 6.1 per cent in July, from 6.2 per cent in June, but only because many people -- especially the young -- left the workforce.
On Monday, Canada Mortgage and Housing Corp. reported that July's annual rate of housing starts was 186,500 units, down from 215,900 units in June.
CREA said the price decline resulted from fewer sales compared to a year ago in the four most expensive major markets -- Vancouver, Victoria, Calgary and Toronto.
Sales in Vancouver were down a staggering 44 per cent, said Porter.
Calgary and Toronto also showed double-digit declines. Saskatoon and Regina recorded drops of 17 per cent and 35 per cent respectively, he said.
Actual sales, however, at 27,889, units, were down 10.9 per cent from the year before, which was the strongest July on record, said CREA.
On the other hand, MLS figures indicated that new listings soared by 11.4 per cent in July over the same period last year, with 50,782 properties for sale in major markets.
That's the second highest level on record, down 0.2 per cent from the peak in May.
"This combination of mounting new listings and fading sales has pushed the market into buyers' territory in many cities, rapidly undercutting pricing power," said Porter.
The new listings-to-sale ratio now stands at 1.87, up from 1.50 a year ago.
New listings in July reached their highest level on record in the country's largest market Toronto, with prices up just 1.5 per cent from a year ago.
Listings were also close to peak levels in Saskatoon, Montreal, Gatineau, Que., Trois-Rivieres, Que., Vancouver and Victoria.
CREA said Vancouver, Victoria, Regina, Saskatoon and Windsor were the most balanced of the major markets in July.
Resale housing markets were tightest in Winnipeg, Hamilton-Burlington, Kitchener-Waterloo, Thunder Bay, Quebec City, Trois-Rivieres, Saguenay, Halifax-Dartmouth, Saint John, N.B., and St. John's N.L..
"The combination of a larger inventory of homes for sale and fewer home sales means less upward pressure on home prices in many markets," said Calvin Lindberg, CREA president.
"There is no doubt the Canadian real estate market is pulling back from the record sales and price increase levels of 2007, which was a record year for MLS sales."
A more balanced real estate market means price gains are slowing in many major centres.
Despite the downturn in Canada's housing market, Porter said the depth of the slide is unlikely to mimic that south of the border.
"While we still doubt that Canada will stage an instant replay of the trauma in the U.S. markets, even a mild version would be bad news," he said.
