SALES of existing homes in Winnipeg dropped 14 per cent in September, but industry officials say it's too soon to say if three straight months of weakening sales is the start of a market correction or a temporary aberration.
The Winnipeg Realtors Association said Friday that Multiple Listing Service (MLS) sales fell to 1,040 units last month from 1,214 in the same month in 2011.
That's a significantly bigger decline than in July and August, when sales were off by two per cent and four per cent, respectively. It was also the first double-digit drop since April last year, when Winnipeggers were preoccupied with one of the worst spring floods in the province's history.
The sales slowdown here is part of a national trend that has seen house sales falling in major cities across the country in recent months. Overheated markets such as Toronto and Vancouver have seen even bigger declines, with Vancouver sales down 32.5 per cent last month and Toronto's off by more than 21 per cent.
Other real estate boards blame the slowdown on the federal government reducing the amortization period for federally insured mortgages to 25 years from 30 years in July in an attempt to slow the rise in consumer debt. That means homebuyers have to come up with bigger down payments, which the boards say has forced some first-time buyers to postpone their purchases.
Shirley Przybyl, president of WinnipegRealtors, said she suspects that's what's behind the slowdown here.
She said most of the factors that have helped to fuel the demand for homes for much of the past decade are still in play: low interest rates, and strong population and employment growth.
Other September MLS sales figures released earlier this week suggest some first-time buyers are retreating to the sidelines here. They showed a sharp drop in sales in two of the price ranges most popular with first-time buyers. One is $150,000 to $199,999, where unit sales were down 20.7 per cent from a year earlier, and the other is $200,000 to $249,999, where they fell by 30.1 per cent.
Canada Mortgage and Housing Corp.'s senior market analyst for Manitoba said it's premature to conclude a correction is underway when the market fundamentals remain so strong.
Dianne Himbeault said when the federal government tightened mortgage lending guidelines in 2009 and in 2010, MLS sales declined for several months and then rebounded because demand for homes remained strong.
"So we could be seeing that again," she said,.
Przybyl said it's also noteworthy that 34 per cent of the detached homes that changed hands last month sold for more than the listed price. That's down only three per cent from September last year, and 2011 was the second best year on record for MLS sales in Winnipeg.
"That tells me we still have demand from buyers."
It also took an average of only one more day -- 27 versus 26 -- to sell a detached home through the MLS.
The 14 per cent drop in sales led to a 10 per cent decline in the dollar volume of sales for the month -- $251 million versus $278 million in September 2011.