TORONTO (Reuters) - Sales of existing homes in Canada jumped in May from April driven by a sharp increase in listings and a deferred start to the spring buying season after a long winter, the Canadian Real Estate Association (CREA) said on Monday.
The industry group for Canadian real estate agents said sales were up 5.9 percent last month from April, the largest month-over-month increase in nearly four years. Actual sales for May, not seasonally adjusted, were up 4.8 percent from May 2013.
The national average price for homes sold in May, not seasonally adjusted, was C$416,584 ($383,800), an increase of 7.1 percent from the same month last year.
Canada’s housing market has risen strongly, if unsteadily, in the past five years, and economists had been waiting for the spring data to gauge whether it is cooling or heating up again.
“May was a catch-up month after a slow start to the spring season,” BMO analyst Atul Shah said in a note to clients, adding that May is typically the biggest month in the year for sales.
“With mortgage rates at rock-bottom levels and the trend in supply (new listings) mirroring sales, we expect the Canadian housing market to remain resilient as we head into the summer months,” he wrote.
CREA’s home price index rose 4.98 percent from May 2013, a slightly smaller increase than the gains of 5.03 percent and 5.19 percent it registered in April and March, respectively.
“Had it not been for such a brutal winter that delayed the launch of the spring market, the improvement in new listings and sales would likely have been more spread out,” said CREA’s chief economist, Gregory Klump. He added that the combined sales over the past three months are roughly in line with the 10-year average for the three-month period.
Fearing a housing bubble, Canada’s Conservative 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 the self-employed and other higher-risk borrowers to take on mortgage debt.
The moves have been credited with slowing the market, and analysts have been watching to see if housing can achieve a soft landing.
TD Bank economist Leslie Preston expects that home sales could keep some of their momentum for a few months yet as lenders continue to advertise attractive mortgage rates.
“However, employment growth is quite modest and house prices continue to outstrip gains in incomes, and TD expects that sales momentum will ebb later this year,” Preston said in a note.
The number of newly listed homes was up 3.8 percent in May from April. The national sales-to-new-listings ratio was 53.1 percent, up from 52 percent in March. Since early 2010, the ratio has remained within a range of 40 to 60 percent, which is viewed as balanced territory.
Reporting by Euan Rocha; Editing by Peter Galloway