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The Bank of Canada announced on December 3^rd, 2014 that it was holding its trend-setting overnight lending rate at 1 per cent.

Economic conditions around the world have changed rapidly in recent months. The Bank’s December 3^rd announcement took a decidedly “on the one hand, on the other hand” approach in addressing how recent developments have altered not only the outlook for inflation and the economy, but also the risks to that outlook.

While it considers the potential upside and downside risks to be balanced, the Bank sees them as having intensified.

1. Risks to the Canadian economy: On the upside, the Bank acknowledged Canadian exports as having improved, resulting in stronger business investment and employment, suggesting the return of balanced and self-sustaining growth. On the downside, the Bank indicated lower prices for oil and other commodities will act as a drag on the Canadian economy, and that household imbalances present a significant risk to financial stability.
2. Inflation risks: On the downside: weaker oil prices could lower inflation. On the upside, The impact of lower oil price may be tempered by a stronger U.S. economy, Canadian dollar depreciation, and recent federal fiscal measures. The Bank acknowledged inflation is up by more than expected due largely to what it considers to be temporary factors, and while underlying inflation has edged up it remains below the 2 per cent target.
3. Interest rate risks: On the upside, developments as outlined above together with upward revisions to past economic data suggest that slackness in the Canadian economy may be less than the Bank previously thought. That means the expected date for the first interest rate hike could be moved up. On the downside, conditions in the labour market continue to suggest there is still plenty of slackness in the Canadian economy. Additionally, lower oil prices could mean slower growth and more time before the Bank starts raising interest rates.

What does all this mean for the interest rate outlook? At this point, not much. The first hike is still pencilled in for later next year. Whether that outlook changes will depend on what happens in the months ahead – and perhaps most importantly, what happens to the price of oil.

As of December 3rd, 2014, the advertised five-year lending rate stood at 4.79 per cent, unchanged from the previous Bank rate announcement on October 22nd, 2014 and down 0.55 percentage points from the same time one year ago.

The next interest rate announcement along with the next update to the Monetary Policy Report will be on January 21^st, 2015.

(CREA 12/03/2014)

Ottawa, ON, September 15, 2014- According to statistics released today by The Canadian Real Estate Association (CREA), national home sales activity rose nearly two per cent from July to August 2014.

Highlights:

• National home sales rose 1.8% from July to August.
• Actual (not seasonally adjusted) activity stood 2.1% above August 2013 levels.
• The number of newly listed homes fell 1.2% from July to August.
• The Canadian housing market remains in balanced territory.
• The MLS® Home Price Index (HPI) rose 5.3% year-over-year in August.
• The national average sale price also rose 5.3% on a year-over-year basis in August.

The number of home sales processed through the MLS® Systems of Canadian real estate

Boards and Associations rose 1.8 per cent on a month-over-month basis in August 2014, marking the seventh consecutive monthly increase, and the highest level for sales since January 2010.

Although activity rose in fewer than half of all local housing markets in August, the national tally was fuelled by monthly sales increases in Greater Vancouver, Calgary and Greater Toronto.

“Sales picked up in some of Canada’s most active and expensive real estate markets which fuelled another national increase,” said CREA President Beth Crosbie. “Even so, the national increase in sales does not reflect local trends in many markets across Canada. As always, all real estate is local and whether you’re looking to buy or sell, your local REALTOR® is your best source of information about the housing market where you currently live or might like to in the future.”

Actual (not seasonally adjusted) activity in August stood 2.1 per cent above levels reported in the same month last year. August sales were up from year-ago levels in just over half of all local markets, led by Greater Vancouver and Calgary.

“Sales activity in recent months has remained stronger than was anticipated earlier this year,” said Gregory Klump, CREA’s Chief Economist. “Listings and sales this spring were deferred due to unseasonably harsh weather, which subsequently supported activity once the delayed spring home buying season got into gear. This trend was reinforced by a decline in mortgage interest rates.”

“The boost from deferred sales is still expected to prove transitory,” continued Klump. “While national activity has yet to cool, sales were down from the previous month in the majority of Canada’s local markets, which may be early evidence that the transitory boost is fading. That said, low interest rates will continue to support housing affordability and sales activity.”

Year-to-date sales activity is up 4.3 per cent compared to the first eight months of 2013 and remains in line with the 10-year average for the period.

The number of newly listed homes fell 1.2 per cent in August compared to July. Led by Greater Toronto, new supply was down in about 60 per cent of local markets.

The national sales-to-new listings ratio was 55.5 per cent in August, up from 53.9 per cent in July. While this means the housing market became marginally tighter, it remains well entrenched within the range between 40 and 60 per cent that marks balanced territory.

Just over half of all local markets posted a sales-to-new listings ratio in this range in August. Of the remainder, more than half were sitting above the 60 per cent threshold that marks the border between balanced and seller’s market territory, almost all of which are located in British Columbia, Alberta and Southern Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 5.8 months of inventory nationally at the end of August 2014, down from 6.0 months in May, June and July. As with the sales-to-new listings ratio, the number of months of inventory remains well within balanced market territory but does point to a market that has become tighter in recent months.

The Aggregate Composite MLS® HPI rose by 5.33 per cent on a year-over-year basis in August. This was unchanged compared to July and little changed from June. Year-over-year price growth in August picked up slightly for townhouse/row units and apartment units but slowed for one-storey single family homes and was unchanged for two-storey single family homes.

Two-storey single family homes continue to post the biggest year-over-year price gains (+6.32 per cent), followed closely by townhouse/row units (+5.59 per cent) and one-storey single family homes (+5.23 per cent). Price growth for apartment units remains comparatively more modest (+3.38 per cent).

Year-over-year price growth varied among local housing markets tracked by the index. As in recent months, the biggest gains were posted by Calgary (+9.83 per cent), Greater Toronto (+7.82 per cent), and Greater Vancouver (+5.01 per cent).

The MLS® Home Price Index (MLS® HPI) provides a better gauge of price trends than is possible using averages because it is not affected by changes in the mix of sales activity the way that average price is.

The actual (not seasonally adjusted) national average price for homes sold in August 2014 was $398,618, up 5.3 per cent from the same month last year.

The national average price continues to be skewed upward by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s largest and most expensive housing markets. Excluding these two markets from the calculation, the average price is a relatively more modest $324,738 and the year-over-year increase shrinks to 3.9 per cent.

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PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 111,000 REALTORS® working through some 90 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.