Home sales activity is generally considered a leading indicator for future price movements, while the overall housing market is considered a leading indicator for future economic growth. Both of which are signalling volatile times ahead.

Per recent data from the Canadian Real Estate Association, national home sales fell 12.6% from last year, with total sales falling below the 10 year average for the month of November. Part of the decline can attributed to a strong November 2017 which saw a flood of buyers rushing to enter the housing market before the new mortgage stress test. However, the year to date numbers suggest there is some significant underlying weakness across the nations historically resilient housing market.

Year to date sales (January through November) are down 11% from last year, and have fallen below the 10 year average. It is the fewest home sales for this period since 2013.

Year to date home sales across Canada

As a result, this is beginning to weigh on home prices. CREA’s HPI home price index has been decelerating rapidly since annual price gains peaked in April 2017. As of November, the index has decelerated to a 2% annual increase. Essentially flat when adjusted for inflation.

Annual percent change in National Price Index

However, over the past 6 months price deceleration has been much more rapid, particularly in BC and Alberta. Greater Vancouver home price declines lead the nation, dropping 5.6% over the past six months. Calgary has dropped 3%, while Edmonton has fallen by 4%. Ottawa and Montreal remain the two strongest markets, showing positive gains of just under 2%.

Benchmark Price Change over the past 6 months.