BUSINESS

CREA: Canadian home sales revive in March; Vancouver, Toronto the only hot spots

04/15/2015 09:26 EDT | Updated 06/24/2015 08:59 EDT
OTTAWA - Low mortgage rates helped boost the number of Canadian home sales in March by 4.1 per cent compared with February, according to the Canadian Real Estate Association.

The association said Wednesday sales through its Multiple Listing Service last month were up in nearly two-thirds of the markets it tracks, led by gains in Vancouver, Calgary and Edmonton.

However, Calgary and Edmonton came in below the 10-year average for the month.

"Low mortgage interest rates are good news for affordability as we head into the spring home buying season," CREA president Pauline Aunger said in a statement.

"This spring should see buyers coming off the sidelines in places where winter was anything but mild."

The country's big banks and other lenders have been cutting mortgages rates heading into the busy spring real estate season.

Advertised fixed rates for a five-year term have dropped well below the three per cent mark, with some smaller lenders offering rates under 2.5 per cent.

"Never underestimate the power of lower interest rates," TD Bank economist Diana Petramala said Wednesday.

"Due to the drop in mortgage interest rates since January, the Canadian housing market continued to outperform other areas of the economy in the first quarter of 2015."

Petramala added that while the Bank of Canada's rate announcement Wednesday suggested further rate cuts are unlikely, the already low rate environment would likely continue to bolster demand.

However, she cautioned that the full impact of the drop in oil prices has yet to been seen and home sales in Alberta and Saskatchewan would likely be affected.

The health of the Canadian housing market has been closely watched for signs of a bubble. In its monetary policy report on Wednesday, the Bank of Canada noted that Toronto and Vancouver remain the hot markets.

"Despite localized risks, the most likely scenario as the economy gains strength remains a soft landing in the national housing market and a stabilization of debt-to-income ratios," the central bank said.

Compared with a year ago, CREA said home sales were up 9.5 per cent, while the average price was up 9.4 per cent at $439,144. Excluding Vancouver and Toronto, the average price was $332,711, up 2.4 per cent from a year ago.

Meanwhile, the MLS Home Price Index was up 4.95 per cent from a year ago.

CREA noted that the number of newly listed homes rose 1.8 per cent in March compared with February, while the national sales-to-new listings ratio was 53.9 per cent in March, up from 52.7 per cent in February.

The association says a sales-to-new listings ratio between 40 and 60 per cent is generally consistent with balanced housing market conditions.