TORONTO (Reuters) - Sales of existing homes in Canada jumped in April from March as the spring market roared to life, though they fell from year-ago levels, the Canadian Real Estate Association said on Thursday.
The industry group said sales were up 2.7 percent last month from March, the third straight month of gains after a particularly brutal winter that kept buyers out of the market.
Sales for April, not seasonally adjusted, were down 0.3 percent from April 2013, and the level of sales is still well below the peak set last August, when home buyers rushed into the market in anticipation of higher interest rates.
Canada’s housing market has risen strongly, if unsteadily, in the past five years, and economists have been waiting for the spring data to gauge whether it is cooling or heating up again.
So far, the rebound has raised expectations for steady demand through the summer, but economists believe the market will soften later in 2014 and into 2015, when many see the Bank of Canada raising interest rates.
“It is anticipated that the housing market will stage a relatively modest rebound through the long-awaited spring and into the summer,” David Tulk, chief Canada macro strategist at TD Securities, said in a note.
“We would note that this move should be the last push higher as interest rates are anticipated to gradually increase from here,” he added.
CREA’s home price index rose 5.0 percent from April 2013, a slight slowdown from March’s 5.2 percent gain and the first deceleration in year-over-year price growth since April 2013.
CREA Chief Economist Gregory Klump said sales in April and for the year to date came in below the 10-year average in more than 60 percent of markets.
“This shows that tightened mortgage rules and guidelines are working as intended to keep activity in check despite mortgage interest rates remaining extraordinarily low,” he said.
Fearing a housing bubble, the Conservative federal government has moved four times since 2008 to tighten lending rules, shortening the maximum length of a mortgage term to 25 years from 40 years and making it harder for marginal borrowers like the self-employed to take on mortgage debt.
The moves have been credited with slowing the market, but analysts are now waiting to see if housing can achieve a soft landing or will collapse.
The number of newly listed homes was up 2.9 percent in April from March. The national sales-to-new listings ratio was 51.9 percent, down from the 52.5 percent in March. Since early 2010, the ratio has remained within a range of 40 to 60 percent, which marks balanced territory.
The national average price for homes sold in April, not seasonally adjusted, was C$409,708 ($375,700), an increase of 7.6 percent from the same month last year. ($1 = 1.0906 Canadian Dollars)
Reporting by Andrea Hopkins; Editing by James Dalgleish and Dan Grebler