TORONTO (Reuters) - Sales of existing homes in Canada rose in March from February even though year-over year sales fell sharply, data on Monday showed, offering more signs that the post-recession housing boom may have turned into a stable slowdown.
Prices were up 2.2 percent from a year earlier, the smallest increase in more than two years, the report from the Canadian Real Estate Association (CREA), the umbrella group for real estate agents, said.
Sales were up 2.4 percent in March from the month before. Actual sales for March, not seasonally adjusted, were down 15.3 percent from a year earlier, the report said.
The March month-on-month uptick in sales, after a 1.1 percent drop in February, and the modest rise in prices raised hopes Canada’s housing market may be on track for a soft landing rather than a U.S.-style crash.
The market was sizzling a year ago, but has cooled sharply since the federal government tightened mortgage rules in July 2012 to prevent a U.S.-style real estate bubble. The changes shortened the maximum mortgage length, making it harder for Canadians to take on too much debt to get into the expensive real estate market.
It was the Conservative government’s fourth such move in four years as it grew alarmed by record high household debt levels.
“Today’s print helps to placate some of the concern that the housing market is in for a crash following an appreciable slowdown in sales and construction activity since the implementation of the fourth round of tighter mortgage regulations last summer,” Mazen Issa, Canada macro strategist at TD Securities, said in a research note.
“We expect the theme of stabilization to take hold over the coming months to reflect shifting fundamentals.”
CREA said there was some noise in the data, including the Easter holiday, which may have held sales back.
“National sales have been holding fairly stable since last summer,” CREA President Laura Leyser said in a statement.
“We’ll be watching closely as the spring market picks up to see whether the March sales increase marks the beginning of an improving trend.”
The CREA report showed the national sales-to-new listings ratio was little changed at 49.9 per cent in March from 50.3 per cent in February. This measure has held fairly steady around this level for the past eight months, CREA said.
Nationally, there were 6.5 months of inventory at the end of March 2013. This was down from 6.7 months reported at the end of February, resulting from the increase in sales combined with a third consecutive decline in the overall supply of homes for sale, the report showed.
The national average price, not seasonally adjusted, for homes sold in March 2013 was C$378,532 ($373,500), up 2.5 percent from the same month last year.
Editing by Jeffrey Hodgson and Peter Galloway