Home sales aren’t just increasing in the U.S., but in Canada too.

Toronto's housing market is Canada's hottest.
Toronto’s housing market is Canada’s hottest.

According to statistics released by the Canadian Real Estate Association (CREA), national home sales activity posted a third consecutive month-over-month increase in April 2015.

The number of home sales processed through the multiple listing service systems of Canadian real estate boards and associations rose 2.3 percent in April 2015 compared to March. This “raises national activity back to where it was during most of the second half of last year,” according to CREA.

Where Was Growth?

April sales were up from the previous month in two-thirds of all local markets, led by the greater Toronto area, the surrounding Golden Horseshoe region and Montreal.

“As expected, low mortgage interest rates and the onset of spring ushered many homebuyers off the sidelines, particularly in regions where winter was long and bitter,” says CREA president Pauline Aunger.

“In recent years, the seasonal pattern for home sales and listings has become amplified in places where listings are in short supply relative to demand,” says Gregory Klump, CREA’s chief economist. “This particularly stands out in and around Toronto. Sellers there have increasingly delayed listing their home until spring. Once listed, it sells fairly quickly.”

Klump also says that sales over the year as a whole in southern Ontario are likely being constrained to some degree by a short supply of single-family homes. “However, the busy spring home buying and selling season has become that much busier as a result of sellers waiting until winter has faded before listing,” he explains

Actual (not seasonally adjusted) activity in April stood 10 percent above levels reported in April 2014. This marks just the third time ever that sales during the month of April topped 50,000 transactions.

Sales were up on a year-over-year basis in about 70 percent of all local markets, led by activity in the lower mainland of British Columbia, greater Toronto, and Montreal. Of the 18 local markets that set new records for the month of April, all but two are in Southern Ontario.

Listings Being Added

The number of newly listed homes was virtually unchanged in April compared to March. Below the surface, new supply rose in almost two thirds of all local markets, led by a big rebound in Halifax-Dartmouth following a sharp drop in March. This was offset by declines in greater Vancouver, Victoria and the Okanagan region, as well as by a continuing pullback in new supply in Calgary. New listings in Calgary have dropped by one-third from their multi-year high at the end of last year to their current multi-year low.

The national sales-to-new listings ratio was 55.3 percent in April, up from 50.4 percent three months earlier, as the ratio has steadily risen along with sales so far this year.

A sales-to-new listings ratio between 40 and 60 percent is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers’ and buyers’ markets respectively. The ratio was within this range in the majority of local housing markets in April.

The number of months of inventory is another important measure of the balance between housing supply and demand, according to CREA. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 5.9 months of inventory on a national basis at the end of April 2015, down from 6.1 months in March and 6.5 months at the end of January when it reached the highest level in nearly two years. While the sales-to-new listings ratio and months of inventory measures of market balance indicate that the housing market has tightened on a national basis over the past few months, both measures remain firmly entrenched in balanced market territory.

Prices Are Rising

Year-over-year price growth accelerated in April for apartment units and two-story single-family homes, while decelerating for townhouse/row units and one-story single-family homes.

Single-family home sales continue to post the biggest year-over-year price gains at 5.84 percent, led by two-story single-family homes at 6.89 percent. By comparison, the rise in selling prices was more modest for one-story single-family homes, gaining 4.2 percent, townhouse/row units, rising 3.87 percent, and apartment units, which were up 2.6 percent.

Price gains varied among housing markets tracked by the index. For the third consecutive month, greater Vancouver, which was up 8.5 percent, and greater Toronto, up 8.43 percent, posted the biggest year-over-year price increases. By comparison, Fraser Valley, Victoria and Vancouver Island recorded gains in the range between 2.7 percent and 4 percent.

Price growth in Calgary continued to slow, with a year-over-year increase of just 2.21 percent in April, the smallest gain in three years and the tenth consecutive month for which the gain diminished.

Prices remained stable on a year-over-year basis in Saskatoon and Ottawa, while rising slightly in greater Montreal, dipping slightly in greater Moncton and falling in Regina.

The actual (not seasonally adjusted) national average price for homes sold in April 2015 was $448,862, up 9.5 percent on a year-over-year basis.

The national average home price continues to be upwardly distorted by sales activity in greater Vancouver and greater Toronto, which are among Canada’s most active and expensive housing markets. Excluding these two markets from calculations, the average price is a more modest $339,893 and the year-over-year gain shrinks to 3.4 percent.

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