SALES ON THE RISE

Home sales, prices up in September
Garry Marr, Financial Post · Friday, Oct. 15, 2010

TORONTO — Housing sales rose in September for a second straight month while average prices reversed the falling trend with a 1.9% increase from August, the Canadian Real Estate Association said Friday.

The Ottawa-based group said sales in September climbed 3% from August on a seasonally adjusted basis. It was the highest number of sales since last May.

At the same time prices also showed some growth. The average sale price across the Multiple Listing Service last month was $331,089, on par with where it stood a year ago, and an increase from $324,928 in August.

"Supply and demand are rebalancing, and that's keeping prices steady in many markets," said Georges Pahud, president of CREA.

With demand improving slightly and the supply of homes falling, the number of months of inventory in the market dropped for a second straight month, the group said. New listings remain 15% below the peak reached in April.

CREA said two-thirds of local markets posted sales increases with Winnipeg, Calgary and Montreal standing out. However, compared with last year sales still lag across the country, down 19.8% in September from a year ago.

"Record level sales activity late last year and earlier this year is expected to further stretch year-over-year comparisons in the months ahead," the group said.

CREA said on a seasonally adjusted basis there was 6.6 months of inventory in the market nationally. That's down from 6.9 months in August and 7.2 months in July. The number of months of inventory represents the number of months it would take to sell inventories at the current rate of sales activity.

The interest-rate environment continues to help the housing market. While the prime lending rate has jumped with recent interest rate hikes from the Bank of Canada, effecting variable-rate mortgages, long-term rates continue to fall. Some lenders are now loaning money as low as 3.5% for a five-year, fixed-rate term.

"Mortgage lending rates eased in the third quarter, which helped support sales activity over the past couple of months," said Gregory Klump, chief economist with CREA. "Interest rates are going nowhere fast, so home ownership will remain within reach for many homebuyers."