A flurry of real estate activity across the country last month led to a record being smashed, with the Canadian Real Estate Association (CREA) reporting the highest number of Canadian home sales on a seasonally adjusted basis for any month, ever.
Following on from the BC Real Estate Association reporting a rush of buyers in December, it seems that other provinces and territories saw the same phenomenon last month.
CREA reported 45,976 (seasonally adjusted) home sales across the country in December, which is 4.5 per cent higher than in November, and 5.7 per cent more than December 2016.
Despite the time of year, this a record for seasonally adjusted sales in any single month, with the last peak occurring in May 2007 at 44,635 units.
Seasonal adjustment is the measure used by economists to smooth out anomalies created by seasonal factors in order to get a better look at market trends – which is why December was able to smash this particular record despite usually being a quiet time of year for home sales.
Actual (non-seasonally adjusted) home sales across the country, at 27,033 units, was still 4.1 per cent higher than November. December 2017 was the third-busiest December ever, with the highest non-seasonally adjusted MLS® home sales activity for month of December being in 2015 (27,165 units) and the second-highest December sales in 2009 (27,147 units).
The rush of sales is almost certainly due to the new mortgage “stress test” that was introduced January 1, as buyers got into the market ahead of the rules that would reduce the purchasing power of many and force them to buy less-expensive properties.
“National home sales in December were likely boosted by seasonal adjustment factors and a potential pull-forward of demand before new mortgage regulations came into effect this year," said Gregory Klump, CREA’s chief economist. “It will be interesting to see if monthly sales activity continues to rise despite tighter mortgage regulations that took effect on January 1.”
Another factor may be the anticipated overnight interest rate hike, which the industry widely predicts may occur as soon as tomorrow (January 17). Buyers with mortgage rate holds in December likely wanted to capitalize on the lower rate before the Bank of Canada makes another hike.
