National home sales jumped by 11.3% between March and April as the real estate market picked up again, but supply remained at a 20 year-low, the Canadian Real Estate Association said Monday.
Seasonally adjusted sales for the month totalled 38,164 compared with 34,277 in March.
Meanwhile, the Canada Mortgage and Housing Corp. says the annual pace of housing starts in April rose 22% compared with March, powered by an increase in starts of multi-unit urban homes.
The actual number of homes sold last month amounted to 44,059, CREA said, down 19.5% from a year prior.
“Canadian housing activity found a serious spark in April, with both home sales and new homebuilding rebounding from somewhat soggier levels in the opening months of 2023,” Bank of Montreal said in a research note.
The year-over-year sales decline was markedly smaller than the drops reported in recent months, CREA said, attributing the return of sales to home prices, which many feel have bottomed out in recent months as interest rates climbed eight times over the last year.
“It wasn’t all that surprising to see buyers jumping off the sidelines and back into the market in April,” Shaun Cathcart, CREA’s senior economist, said in a press release.
“Supply, on the other hand, has been sluggish, hence the price gains from March to April seen all over the country.”
The seasonally-adjusted number of new listings edged up 1.6% to 54,355 in April from March. The actual number of new listings was 67,472, about 26% lower than a year ago.
The first week of May, which is not included in CREA’s April data, showed a burst of new supply, said Cathcart.
He believes the slight uptick suggests many April buyers were existing owners who are only now looking to sell their current homes.
“That could make for the kind of virtuous circle that might ultimately get more first-time buyers into the ownership space this year,” he said.
Those who waded into the market last month found the seasonally adjusted average price hit $695,887, up 5.7% from March.
The actual average home price was roughly $716,000 in April, down 3.9% from April 2022, but up $103,500 from January 2023.
CREA attributed the gains seen since January to “outsized sales rebounds” in the Greater Toronto Area (GTA) and B.C.’s Lower Mainland, which tend to be hot markets.
Excluding the GTA and Greater Vancouver from the calculation cuts more than $144,000 from the actual national average price, CREA said.
A report from National Bank Financial Inc. suggested the pause in the Bank of Canada’s rate hiking cycle could be a factor contributing to the rebounding market.
“Indeed, now that the Bank of Canada has stopped raising its policy rate in recent months, buyers are probably perceiving less uncertainty and taking action,” it said.
However, at some point, a rebounding housing market may prompt further concern from the central bank.
“If housing — the most interest-sensitive and cyclical sector of the economy — is showing a renewed pulse, it begs the question of whether monetary policy is nearly tight enough,” BMO said.
“While we don’t look for further rate hikes by the Bank of Canada, renewed strength in housing certainly aims the risks squarely in that direction.”