March 6 (Reuters) - Toronto home sales slumped in February from a year ago as the market continued to be dampened by tighter mortgage rules and higher borrowing costs, though demand for condominiums helped prices stabilize, data showed on Tuesday.
Economists and realtors have been expecting home sales in Canada’s biggest city to be weak at the start of the year, especially compared with the record sales recorded in the early months of 2017.
The Toronto Real Estate Board said sales of detached homes were down 41.2 percent last month, while semi-detached homes fell 28.7 percent, condo sales dropped 30.8 percent and townhomes were down 26.8 percent.
Total home sales were down 34.9 percent as prospective home buyers were still coming to terms with the psychological impact of a number of measures taken by the Ontario government last year to try to cool the market, including a tax on foreign buyers, the report said.
Tighter mortgage lending rules that came into effect at the beginning of 2018 and higher interest rates have also prompted some buyers to re-evaluate their plans, said Tim Syrianos, president of the real estate board.
The Bank of Canada has raised interest rates three times since last July and is expected to continue to hike later in the year.
The average home price in Toronto was C$767,818 ($591,129). While that was down 12.4 percent from last year, it made for a 4.4 percent monthly gain compared with January.
The stabilization in prices was driven by higher costs for condominiums. Price growth is expected to be concentrated in condos and townhomes as the year goes on given their relative affordability, the report said.
The home price index, preferred by analysts because it smoothes out the composition of sales, was up 3.2 percent from the year before. ($1 = $1.2989 Canadian) (Reporting by Leah Schnurr; Editing by Jonathan Oatis)