(Bloomberg) -- Toronto home sales tumbled in the first month of 2018, as tougher mortgage qualification rules came into play and borrowing costs rose.
Sales in Canada's biggest city fell 22 percent to 4,019 units from a year earlier, according to data released Tuesday by the Toronto Real Estate Board. It was the weakest month of sales for January since 2009. The average price of a home sold in Toronto was C$736,783 ($587,968), down 4.1 percent from January 2017, though little changed from December.
Toronto's once-hot housing market has been correcting as various levels of government and regulators took measures to curb spiraling prices and soaring debt in the country. Most recently, tougher mortgage guidelines came into play on Jan. 1, making it harder for prospective buyers to qualify for loans. Many buyers rushed into the market in December to get ahead of the rules.
“It is not surprising that home prices in some market segments were flat to down in January compared to last year,” said Jason Mercer, the board's director of market analysis. “At this time last year, we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace.”
The industry group remains optimistic the market will stabilize, releasing a 2018 outlook last week that pointed to a slower sales start to the year as the market adjusts to the changes.
“As we move through the year, expect the pace of home sales to pick up,” board president Tim Syrianos said in the statement.
The benchmark home price index remained relatively unchanged in January despite the slump in sales, according to Bloomberg calculations. The index has dropped nine percent since May, mainly due to falling prices in Toronto's detached market. The condominium segment, in contrast, has seen double-digit annual growth.
“It is likely that market conditions will support return to positive price growth for many home types in the second half of 2018,” Mercer said.
New listings rose 17 percent from the same period last year, but it was the second lowest level for January in the past decade. Active listings soared 136 percent from a year earlier.
To contact the reporters on this story: Natalie Wong in Toronto at nwong133@bloomberg.net, Erik Hertzberg in Ottawa at eschmitzhert@bloomberg.net.
To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Theophilos Argitis, Jacqueline Thorpe
©2018 Bloomberg L.P.
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