Canadian home sales fell to the lowest in more than five years in April, as tougher mortgage qualification rules deterred buyers.
The number of homes sold last month declined 2.9 per cent from March, the Canadian Real Estate Association said Tuesday from Ottawa. Declines were recorded in about 60 per cent of cities tracked including Vancouver, Calgary, Toronto and Montreal.
It was a disappointing start to the busy spring selling season for realtors that suggests markets are still struggling with tougher rules that require borrowers to prove they can afford to cope with higher interest rates. Policy makers made the changes along with other steps, such as foreign buyers taxes, to put the brakes on a surge in price gains last year that some fear could be a danger to the financial system.
The drop in April is the third monthly decline this year, with sales down over 20 per cent since December. The new mortgage qualification rules kicked on Jan. 1.
“This year’s new stress test has lowered sales activity and destabilized market balance for housing markets in Alberta, Saskatchewan and Newfoundland,” CREA economist Gregory Klump wrote in the report. “This is exactly the type of collateral damage that CREA warned the government about.”
Even with the drop in sales, prices are still holding up. The benchmark index climbed 0.6 per cent on the month, and is up 1.5 per cent from a year ago.
The number of new homes listed for sale also declined 4.8 per cent in April.