Canadian home sales rise in February, forecast trimmed

Mon Mar 17, 2014 11:10am EDT
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By Andrea Hopkins

TORONTO (Reuters) - Sales of existing homes in Canada edged higher in February from January, the first monthly increase after five straight declines, the Canadian Real Estate Association said on Monday, but it trimmed its sales forecast for this year.

The industry group for Canadian real estate agents said home resales were up 0.3 percent last month from January, seasonally adjusted. On a year-on-year basis, sales rose 1.9 percent from February 2013, not seasonally adjusted.

Canada's housing market slowed in the final months of 2013 and analysts are waiting to see whether sales will rise again in the spring, the traditional start to the home-buying season. The number of sales in February was 9.3 percent below the peak reached in August 2013, but prices have generally continued to tick higher.

In a separate report, CREA cut its forecast for 2014 sales to 463,700 units, a 1.3 percent increase from 2013. In its previous quarterly forecast in December, CREA had expected sales of 475,000 units in 2014, a 3.7 percent increase from 2013.

The group forecast 2015 sales at 469,400, up a further 1.2 percent.

Canada escaped the U.S. housing crash after the 2008-09 financial crisis and home prices have risen dramatically, if not steadily, in the past five years despite federal government moves to tighten mortgage lending rules.

While some economists have predicted the Canadian market will crash, most have said they expect sales and new construction to level off in 2014 and 2015 as mortgage rates rise, with prices continuing to tick slowly higher.

"(CREA's) forecast for 2014 is broadly consistent with our own slightly more constructive estimate of 2.3 percent, but we see sales effectively flat in 2015," Mazen Issa, senior Canada macro strategist at TD Securities, said in a research note.   Continued...

A home for sale is seen in Toronto, March 11, 2014. REUTERS/Aaron Harris