Houses for sale in Ottawa

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National homes sales jumped on a year-over-year basis in January and both the benchmark and average selling price were higher as well, hopeful signs that a resurgence in the housing market could be underway, according to the industry group representing Canadian realtors.

The 22 per cent surge in sales compared to January 2023 marked the most substantial year-over-year increase since May 2021, data released Feb. 14 by the Canadian Real Estate Association showed.

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Benchmark home prices were up 0.6 per cent to $717,800 from a year earlier, but dipped by 1.2 per cent month over month. The national average home price, however, was up 7.6 per cent from January 2023 to $659,395.

“Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers; however, in areas where sales have shot up most over the last two months, prices are still trending lower,” CREA senior economist Shaun Cathcart said. “Taken together, these trends suggest a market that is starting to turn a corner but is still working through the weakness of the last two years.”

Markets that have seen prices dip are primarily in Ontario, notably the Greater Golden Horseshoe, with some in British Columbia. Prices in other parts of Canada remain mostly stable, and are still on the rise in some regions, such as Alberta and Newfoundland and Labrador.

While the number of transactions was up significantly over January 2023, the increase was partly due to the low base of comparison and overall activity is still below average.

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On a seasonally adjusted basis, sales were up 3.7 per cent from December 2023, following a 7.9 per cent month-over-month rise. While current activity is comparable to the stronger months of spring and summer in 2023, it still lags behind the 10-year average by about nine per cent as of the start of 2024.

The number of newly listed homes in January inched up by 1.5 per cent compared to the previous month, but it still hovers near the lowest level since last June.

For Desjardins economist Marc Desormeaux, the economic backdrop means it is “too soon to assume that a return to frothy market conditions is imminent across the country.”

“Despite better-than-expected January results, we still don’t think Canada’s labour market has felt the full effects of rate hikes already completed,” he said in a note to clients. “Those could weaken housing demand in the coming months.”

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Desormeaux believes that the Bank of Canada will start to cut rates in the second quarter of the year, bringing some relief to mortgage holders.

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