Thursday, August 24, 2006

Ottawa Housing Slump Worsens

More alarm bells for the stumbling Ottawa housing market rang Thursday, as a report the Canadian Real Estate Association (CREA) on new home sales showed a bigger-than-expected drop in sales, along with a continued rise in unsold homes and a further weakening of prices in the closely watched sector.

A total of 26,986 homes were sold across Canada in July.
The pace of new home sales is now down 4.1 % from year-earlier levels, with every region of the country showing double-digit % declines compared to July 2005.

The drop was worse than the forecast of economists, who had estimated new home sales would slip in the most recent report.

The median price of a new home came in at $180,000 in the latest report, essentially flat to the year earlier price levels and down 2 % from the June reading. Median price is the point at which equal numbers of homes sell for more and less.

Last year saw rapid increases in prices to record highs, prompting a building boom that helped to create the current oversupply of new homes. The median price is now down 9 percent from the record high set in April of this year.

The supply of new homes completed and available for sale rose to a record 96,000 in July, up 4 % from the previous record in June and up 27 % from year-earlier levels.

Still the slower sales pace seen in July led to the government to report a 5-10 month supply of new homes on the market, the largest supply by that measure since November 1995.


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