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Canadian Home Sales Fell in July as Average Price Slumped to Six-Month Low

Canadian Home Sales Fell in July as Average Price Slumped to Six-Month Low

Canadian existing-home sales fell in July and the average price declined to its lowest in six months, the Canadian Real Estate Association said in a statement today.

Purchases dropped 0.1 percent to 37,492 units on a seasonally adjusted basis after climbing 2.6 percent in June, the association said. Compared with the same month a year earlier, sales rose 12.3 percent in July.

Canada’s real estate market has stayed strong since 2009, with buyers taking advantage of historically low interest rates and available credit from banks that largely escaped the financial crisis. Bank of Canada Governor Mark Carney said in a June 15 speech that home prices in some parts of the country are reaching “severely unaffordable” levels.

The average price was C$361,181 ($366,998) in July on an unadjusted basis, the lowest since January, according to the association, which represents more than 100,000 realtors. Prices are 9.3 percent higher than a year earlier.

While the average price reflected homes in some expensive neighborhoods of Vancouver, “this factor is now diminishing,” the realtor group’s chief economist, Gregory Klump, said in a statement.

‘Stark Contrast’

“The national share of sales activity in some of Canada’s more expensive urban centers may retreat further from elevated levels recorded earlier this year, resulting in an easing trend for the national average home price,” Klump said. “Even so, the stability of Canada’s housing market will likely continue to stand in stark contrast to further expected volatility in financial markets.”

Among Canada’s major cities, sales rose in Montreal, Calgary and Edmonton. Purchases slid 0.8 percent Toronto and fell 3.2 percent in Vancouver compared with June.

The group also raised its forecast for both sales and prices for 2011 while lowering its projection for 2012 as a result of an “erosion in affordability” due to higher prices, the association said.

The association expects national sales to reach 450,800 this year, up less than 1 percent from 2010. The group had previously forecast a decline in purchases of about one percent in 2011. CREA forecasts that the average national price will rise 7.2 percent this year to C$363,500.

The association forecasts sales to drop 0.7 percent next year, and projects the national price will increase marginally to C$363,600.

SOURCE:To contact the reporters on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net; Andrew Mayeda in Ottawa at amayeda@bloomberg.net