Homes sales and prices up again in March. Is it the start of a trend?

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Both existing home sales and average prices were up on a monthly basis in March, while housing inventory got even tighter.

The latest data from the Canadian Real Estate Association showed a 1.4% month-over-month increase on a seasonally adjusted basis. That follows a 1.5% gain in February, marking the first back-to-back increase since the housing correction began. That said, resales in March were still near their lowest level in over 13 years.

The gains were driven by a 10% jump in sales in British Columbia, while increases were more subdued in other provinces, such as Ontario (+1.1%), Manitoba (+1.2%) and Quebec (+0.8%).

The national average price also rose for the second straight month to a non-seasonally adjusted $686,371. That’s still down 13.7% from the same time last year, but average prices have now rebounded nearly $75,000 since January, CREA noted.

“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,” Jill Oudil, Chair of CREA, said in a release. “With buyers re-entering a market with historically low supply, homes are not only selling but selling faster.”

Inventory falls as new listings reach 20-year low

Housing inventory on the market continued to dwindle, with CREA reporting just 3.9 months of inventory. That’s down from 4.1 in February and is now at the lowest level again since October.

New listings were down 5.8% month-over-month, reaching a 20-year low, CREA said. With new listings falling and sales rising, the sales-to-new-listings ratio jumped to 63.5%, eight points above its long-term average, CREA said.

Sellers have “yet to come out of hibernation,” noted RBC’s Robert Hogue. “In fact, Canada’s housing market could be potentially busier at this stage were there more homes for sale. Back-to-back drops in inventories have tightened demand-supply conditions, pitting more buyers against each other in bidding contests in parts of the country (e.g. Toronto, Vancouver).”

Cross-country roundup of home prices

Here’s a look at select provincial and municipal average house prices as of February.

Location Average Price Annual price change
Quebec $471,460 -3.6%
B.C. $960,067 -11.7%
Ontario $881,946 -16.4%
Alberta $446,263 -4.6%
Halifax-Dartmouth $496,900 -4.9%
Barrie & District $798,200 -21.2%
Greater Toronto $1,118,500 -16.2%
Victoria $851,400 -9.1%
Greater Vancouver $1,143,900 -9.5%
Greater Montreal $511,500 -6.4%
Calgary $528,700 +1.1%
Ottawa $622,300 -14.5%
Winnipeg $336,300 -8.4%
St. John’s $307,600 +2.1%
Saskatoon $376,300 +2.2%
Edmonton $371,200 -7.7%

*Some of the movements in the table above may be somewhat misleading since average prices simply take the total dollar value of sales in a month and divide it by the total number of units sold. The MLS Home Price Index, on the other hand, accounts for differences in house type and size.

Does the March data signal the start of a trend?

Analysts say two months of data aren’t enough to establish a longer-term trend, but they point to supporting factors that are building the case for a turnaround in Canada’s housing market.

“While two consecutive monthly increases in seasonally adjusted home sales don’t make a trend, gains in four of the past six months is certainly starting to look like one,” wrote Randall Bartlett, Senior Director of Canadian Economics with Desjardins Group.

“Surging population growth and a tight labour market have no doubt played a role
in supporting the stabilization of the housing market,” he added. “But high borrowing costs remain a headwind, particularly for first time homebuyers.”

Hogue also believes the housing market bottom is now in sight.

“We think developments in March are evidence that a cyclical bottom is now forming nationally and in many local markets (including in Ontario and British Columbia),” he wrote. “The trough won’t be far behind in other areas.”

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