New housing listings soar as experts expect slowdown

Canadians listed their homes for sale in record numbers in April as countrywide housing inventory hit levels not seen in almost a year, says the Canadian Real Estate Association.

While the market has not slumped, just about everybody tracking the sector -- from economists and builders to real estate executives -- say there is nowhere else to go but down in prices and sales.

"We are still a far cry from where we were," said Gregory Klump, chief economist with CREA, referring to the bottom of the market in January 2009 when there was 12.8 months of unsold inventory on a seasonally adjusted basis. The inventory represents the number of months it would take to sell current homes at the current rate of sales activity.

Inventory rose to 5.3 months in April on a seasonally adjusted basis, the highest since May 2009, in part because new listings show no sign of slowing: 99,901 homes went to market last month, the best April on record.

At the same time that supply is increasing, demand appears to be slowing. Seasonally adjusted homes sales were down 2.6% in April from a month earlier. Sales are off 6.8% from the peak reached in December 2009.

The impact on prices is being felt, but not enough to stop the double-digit percentage increases that have become the norm over the past year.

The average price of a home sold last month was $344,968, a 12.2% increase from a year earlier.

"Next month will mark the passage of one year since the national average price rebounded from the re-cessionary trough to return to the pre-recession peak, so the rise in the nationalaverage price is expected to be more subdued next month, " said Mr. Klump, who added prices could go higher in the coming months because of the looming HST in British Columbia and Ontario. Purchasers in those provinces are trying to beat a July 1 deadline when the tax comes into effect.

"The national average price could potentially be skewed higher over the next couple of months if buyers of higher-priced homes in Ontario and British Columbia move their purchase decision forward to beat the introduction of the HST," said Mr. Klump.

Doug Porter, an economist with Bank of Montreal, said the surprise in the latest housing numbers is that the market didn't heat up even more. In addition to the looming HST, consumers were expected to jump into the market to beat tougher borrowing rules from Ottawa and an increase in mortgage rates.

"I think the concern is we would have a real blow in the spring and pay the price for it in the fall. Instead, what we are seeing is the market is coming in for a soft landing. It's moderating even before things like higher rates and GST begin to bite," said Mr. Porter.

Royal LePage Real Estate Services Ltd. chief executive Phil Soper, said the market peaked in the fourth quarter of 2009 and he expects it to balance out as inventory levels rise and demand slows.

"We'll see the amount of time on the market increase," said Mr. Soper, who expects price increases to become smaller.

"We will be looking at very low or flat prices in the second half of the year. It's unfolding as expected."

(prepared by Garry Marr/National Post)