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June 29, 2009

Spring rebound in Canadian resale housing market

The Canadian resale housing market experienced a rebound in May, returning to pre-recession levels with an increase in transactions in some of the nation’s most expensive markets.

According to the Canadian Real Estate Association (CREA), seasonally-adjusted home sales rose eight per cent to 37,649 units in May compared to April. This is a 43 per cent increase from January 2009 and marks the fourth consecutive monthly increase in seasonally- adjusted activity.

“Strengthening consumer confidence, low interest rates, and improved affordability are drawing buyers to the housing market across Canada,” said CREA president Dale Ripplinger.

It was gains in major cities that contributed most to the overall increase in monthly activity: Toronto was up nine per cent; Calgary 25 per cent; Montreal 10 per cent; Vancouver eight per cent and Edmonton 12 per cent.

Meanwhile, the national residential average sale price in May reached the highest monthly level on record: $319,757, up slightly from the previous record set in May 2008.

CREA says it’s this strong rebound in sales activity in Canada’s most expensive markets that is responsible for the jump in average prices nationally, not an increase in the prices themselves.

Over the past four months, the national residential average price has recovered 16.4 per cent from the January low, climbing to new heights nationally, and in Saskatchewan, Ontario, Quebec, New Brunswick, and Nova Scotia.

Meanwhile, the supply of homes coming onto the market continued to decelerate in May. Seasonally adjusted new residential listings in May were down 19 per cent from the peak reached one year ago.

National sales activity as a percentage of new listings reached the highest point since December 2007, climbing 10 per cent from the previous month to $11.4 billion in May — more than 50 per cent above the low of $7.5 billion reported last January.

“Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses,” said CREA chief economist Gregory Klump.

“The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets.”

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