Canadian home sales rise in March as spring buoys buyers

Tue Apr 15, 2014 10:59am EDT
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By Andrea Hopkins

TORONTO (Reuters) - Sales of existing homes in Canada jumped in March from February and prices continued to tick higher as the winter deep freeze ended and home buyers started to come back into the market, the Canadian Real Estate Association said on Tuesday.

The industry group for Canadian real estate agents said sales activity was up 1.0 percent last month from February, and February's gain was revised up to a 0.6-percent rise, from 0.3 percent reported previously. The back-to-back monthly gains followed five straight months of falling sales as the particularly brutal winter kept the market on hold.

"The release of pent-up demand from the winter months and a renewed downdraft in mortgage rates will help boost sales further in the coming months," David Tulk, chief Canada macro strategist at TD Securities, said in a research note.

Actual sales for March, not seasonally adjusted, were up 4.9 percent from March 2013.

CREA's home price index rose 5.2 percent from March 2013, a slight acceleration from February's 5.1 percent gain.

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. Mortgage rates, which are expected to rise later this year and into 2015, drifted lower in recent weeks, helping spur demand.

While most are predicting a strong spring and summer, analysts expect the market to gradually cool as rising interest rates make homes less affordable.

"Listings have been light over the winter, even relative to the seasonal norm in many cities, so the real test of market health will be seen in the next few months, as both weather and listings warm up," Avery Shenfeld, chief economist at CIBC World Markets, wrote in a research note.   Continued...

A "Sold" sign hangs in front of a house in Toronto, Ontario March 2, 2014. REUTERS/Hyungwon Kang