Sales of existing homes in Canada slipped further in January – by double digits in Edmonton – as the drop in oil prices hurt homebuyer demand in Western Canada.
That’s according to a report from the Canadian Real Estate Association (CREA) on Tuesday, with one analyst saying seller panic has set in.
“What is interesting to note about the housing measures is that there is a clear sense of panic,” Mazen Issa, senior Canada macro strategist at TD Securities, said in a research note.
Issa said Alberta and Saskatchewan were the epicenter of housing-related weakness in January, with sales down 24 percent in Calgary, 10 percent in Edmonton, 7 percent in Regina and 18 percent in Saskatoon.
A sharp and sustained drop in oil prices has sideswiped the economy in the resource-rich provinces of Alberta and Saskatchewan, where homeowners are trying to sell their houses before values drop further.
CREA, the industry group for Canadian real estate agents, said sales activity across Canada was down 3.1 percent last month from December, the third consecutive monthly decline.
The data suggested Canada’s prolonged housing boom may finally be ending after more than five years of rising sales that pushed home prices to record highs.
Canada escaped the U.S. housing crash due largely to more prudent lending standards, but the long boom and high consumer debt levels have raised fears of a U.S.-style collapse.
Prices, which lag sales, remained 5.2 percent higher than a year earlier, according to CREA’s home price index.
Actual sales for January, not seasonally adjusted, were down 2.0 percent from the same month in 2014, the first year-over-year decline since April 2014.
“While national new listings were up by a modest 0.7 percent in January (after a 1.3 percent increase in December), the regional breakdown reveals a rush of homeowners looking to obtain top dollar before their respective regional housing market nosedives on the price,” Issa said.
The national sales-to-new listings ratio dipped to 49.7 percent as the number of newly listed homes rose faster than sales. It’s the first time the measure dipped below 50 percent since December 2012, CREA noted.
At the same time, months of inventory rose to 6.5 months, its highest since April 2013.
The national average price, not seasonally adjusted, for homes sold in January 2015 was up 3.1 percent from a year earlier to C$401,143 ($323,581), the smallest year-over-year gain since April 2013. ($1 = 1.2397 Canadian dollars)