TORONTO — Canada’s housing market saw another so-called payback sales drop in February, when the national average home price slumped by 5% from a year ago, after a surge in sales late last year from homebuyers looking to purchase ahead of this year’s new mortgage rules.
The latest monthly figures from the Canadian Real Estate Association showed that sales volume was down 16.9% in February compared with a year ago, and down 6.5% compared with January.
February’s home sales decline marked the second consecutive month-over-month decline and the lowest reading in nearly five years, the national association said.
“The drop off in sales activity following the record-breaking peak late last year confirms that many homebuyers moved purchase decisions forward late last year before tighter mortgage rules took effect in January,” said Gregory Klump, CREA’s chief economist in a statement Thursday.
The federal banking regulator’s tougher rules, which took effect Jan. 1, now require a stress test to be applied even to borrowers with more than 20% down payment.
The widespread pattern was yet another indication that recent regulatory changes, and not local market conditions, were behind softer sales activity in early 2018, said RBC economist Josh Nye.
“The roller coaster ride that was Canada’s housing market in 2017 has continued this year with resales posting another sizeable decline in February,” he said in a research note.