TORONTO (Reuters) - Sales of existing homes in Canada were unchanged in November from October, but the Canadian Real Estate Association revised up its forecasts for sales in 2014 and 2015 amid expectations that low interest rates will remain support continued strength.
The industry group for Canadian real estate agents said on Monday sales activity was flat last month from October. Actual sales for November, not seasonally adjusted, were up 2.7 percent from November 2013.
CREA’s home price index rose 5.2 percent from November 2013.
While sales took a breather in November, analysts said overall conditions remain upbeat as historically low interest rates keep buyers in the market, and CREA revised up its forecasts for annual sales in 2014 and 2015.
Canada escaped the U.S. housing crash that accompanied the 2008-09 financial crisis, and home prices have risen sharply, if not steadily, over the past five years, leading to some concern about a housing bubble, particularly in major cities.
CREA raised its forecast for sales of existing homes in 2014 to 481,300 a 5.1 percent increase from 2013. In its September report, CREA had forecast sales of 475,000, a 3.8 percent increase from 2013.
While such a pace of annual activity is 8 percent below the record set in 2007, it marks the strongest annual sales since then, CREA noted.
CREA forecast sales of 485,200 units in 2015, an upward revision of its September forecast of 473,100 sales, as exports, job growth and incomes are expected to improve and borrowing costs tick only slightly higher. That would represent a 0.8 percent increase from 2014.
“While sales nationally are still expected to peak this year and trend lower throughout 2015, they are not expected to return to weakened levels recorded in the first quarter of 2014,” CREA said in a statement.
A renewed push lower in borrowing costs suggests continued momentum heading into 2015, said David Tulk, chief Canada macro strategist at TD Securities.
“While downside risks to the outlook dominate current thinking, the challenge posed by household imbalances will only grow the longer they are left unattended,” Tulk said in a note to clients.
Analysts do not expect Canada’s central bank to raise rates until the second half of 2015.
Reporting by Andrea Hopkins; Editing by Nick Zieminski