August sales signal end to Metro housing slump

Lower Mainland home sales momentum firmed through August, pointing to an end to the down cycle observed earlier this year.

Buyers are returning to the market amid rising affordability due to declines in mortgage rates and prices. The effects of federal mortgage stress tests, while still prevalent, are likely fading as prospective buyers save larger down payments and wages increase.

Multiple Listing Service (MLS) sales in the Metro Vancouver and Abbotsford-Mission region reached 3,501 units in August, marking a year-over-year gain of 14%. Despite the improvement, home sales remain relatively weak.

Rising home sales contributed to an uptick in the new-listings trend as more sellers sensed an improvement in demand, while the sales-to-active-listings ratio is showing more signs of balance in the marketplace.  

Home prices look to be forming a bottom. The region’s month-to-month average price edged higher but was down 3% from same-month 2019. Year-over-year deceleration has slowed. Benchmark values are also showing signs of stabilizing. The indicator, which adjusts for housing attributes, fell 0.2% from July, and the pace of year-over-year declines has slowed to 7.3% from 8.4% in July. 

For the most part, we see the current down cycle as near an end. Prices will continue to ease over the coming months, but at a mild pace as sales rise. Weakness in the broader economy is a potential threat to the local economy and housing markets, although rate cuts would blunt much of the impact.

B.C. international goods exports continued to struggle through July with dollar-volume shipments down 7.6% year-over-year. While slightly improved from a 9% decline in June, sales continued to edge lower to the lowest pace in more than two years. Year-to-date exports fell 2.8% over the first seven months.

Weaker July exports were led by deterioration in metallic and non-metallic mineral products, which fell 11% from June and 33% from a year ago. Year-over-year forestry products were down 28%. These two product groups have accounted for all of this year’s decline. Sales in the former were down 22% or $525 million over the first seven months; forestry products were down nearly $1.4 billion.

Excluding these sectors, exports rose 8%. A relatively low Canadian dollar remains a support for export sales.

Dollar-volume imports fell 3.2% year-over-year and were down 1.5% through the first seven months. With exports declining faster than imports, B.C.’s trade deficit rose marginally during the first seven months to $7.5 billion compared with a year ago. •

Bryan Yu is deputy chief economist at Central 1 Credit Union.