Canadian home sales activity continued to rebound last month, suggesting the nation’s housing market is improving after a sluggish start to the year.
Home sales rose 1.9% nationally in May, the Canadian Real Estate Association said Friday from Ottawa. It’s the third-straight reported increase in transactions, after a brutal February which saw sales plummet as homebuyers grappled with rising interest rates and tighter mortgage rules. National home sales rose to 39,351 on a seasonally adjusted basis, the most since January 2018.
The report is in line with other recent data that suggests housing has begun to recover from a recent slump, easing concerns that some of the country’s more expensive markets like Toronto were poised for a major correction.
A moderation in prices appears to be helping to boost demand. After peaking last year, following a five-year run of gains, benchmark prices have begun to inch lower. On a seasonally adjusted basis, prices have dropped now for five straight months, and are down 1.4% over that time. From a year earlier, benchmark prices are down about 0.6% nationally.
CREA now predicts home sales nationally will rise 1.2% in 2019, a reversal from a previous forecast for a drop of 1.6%. The Realtor group cited strong fundamentals outside of the prairie provinces, solid population and employment growth, and the expectation that the Bank of Canada will refrain from raising interest rates for the rest of the year.
The Realtor group also cited changes to the federal government’s homebuyer program, which were introduced in this year’s budget and which partly took effect in late March, as supportive.
“These factors are expected to support the beginnings of a recovery in home sales over the second half of 2019 after starting this year on a weak footing,” the group said in a release, though it cautioned sales would probably remain “well below” levels from recent years because of other government policy changes, in particular tighter mortgage qualification rules.