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National homes sales continued to rise in March while markets are considerably tightening as sidelined buyers return, according to a report by the Canadian Real Estate Association.

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The 1.4 per cent increase in sales recorded by Multiple Listing Service (MLS) systems marked the first back-to-back monthly gains in more than a year, CREA said. The gains in the past two months show that the housing-market slowdown might be turning around.

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The association, which represents more than 100,000 realtors, updated its 2023 and 2024 resale housing market forecasts on April 14 following the modest monthly gains posted in February and March.

“As the spring market heats up and it looks as though some buyers are coming off the sidelines, it’s important to remember that the intense market conditions of recent years have not gone anywhere, they’ve just been on pause,” CREA chair Jill Oudil said in a press release.

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She said homes are also selling faster, with buyers re-entering a housing market with historically low supply. The latest figures show a 5.8 per cent month-over-month drop in the number of newly listed homes in March.

“New supply is currently at a 20-year low,” CREA said, noting the monthly decline in March was led by a majority of major census metropolitan areas.

The intense market conditions of recent years have not gone anywhere, they’ve just been on pause

Jill Oudil, chair, CREA

The association said the actual or non-seasonally adjusted number of transactions in March was down 34.4 per cent from 2022’s historically strong March.

It said the March 2023 sales figure was similar to those in 2018 and 2019, and was also the smallest year-over-year decline since September last year.

“The 2023 spring housing market is getting going after a tough 2022, and the green shoots continued to pile up in March,” Shaun Cathcart, CREA’s senior economist said.

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Supply remains an issue even though sales are trending up, the Bank of Canada’s benchmark interest rate is on hold and the MLS Home Price Index is stabilizing across the country, he said.

CREA also said the sales-to-new listings ratio jumped to 63.5 per cent in March, the tightest market in a year. New listings have fallen considerably, and sales are moving higher once again.

The Aggregate Composite MLS Home Price Index was also up 0.2 per cent on a month-over-month basis in March, which CREA noted is the first increase, albeit a small one, since February 2022.

“Some buyers are expected to emerge back into the housing market, after waiting on the sidelines for added certainty around mortgage payments and property value — two important signals that could be here,” CREA said in a separate press release about its updated forecast.

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It expects around 493,000 properties to be resold via MLS systems in 2023, a 1.1 per cent decline from 2022 and almost unchanged from the previous national forecast.

“With nearly a year without any large declines, the downward adjustment to sales activity from rising interest rates and high uncertainty looks to be in the rear-view mirror,” CREA said.

It also predicted the national average home price will decline 4.8 per cent on an annual basis to $670,389 in 2023, but that’s up by about $8,000 from its previous forecast.

CREA’s data is largely in line with similar reports on the Canadian housing market released earlier this week.

An April 13 report by Royal LePage showed an earlier-than-expected boost in activity in Canada’s major housing markets, which led the real estate company to raise its forecast for home price gains in 2023.

Royal LePage said demand is again outpacing supply as buyers return in force, particularly first-time homebuyers, while housing supply conditions remain “ultra-low.”

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