07/16/2018 14:22 EDT | Updated 07/17/2018 12:13 EDT

Canadian Housing Market Climbing Out Of Slump, But Still Far From Rebound

June marked the first "substantive" increase in home sales this year, Canadian Real Estate Association says.

A real estate sign is pictured in Vancouver, B.C., Tues. June, 12. Canadian housing activity appears to be climbing out of its slump, but is still far from a rebound.

TORONTO — Canadian housing activity appears to be climbing out of its slump, but is still far from a rebound.

The Canadian Real Estate Association (CREA) said Monday sales in June were up 4.1 per cent compared with May, marking what the board described as the first "substantiative" month-over-month increase this year.

However, the June sales were down 10.7 per cent compared with a year ago, a five-year low for the month.

"The national increase in June home sales suggests activity may indeed be starting to turn the corner," said Gregory Klump, CREA's chief economist, in an email. "Even so, the number of homes trading hands has a long way to go before it returns to levels posted in recent years."

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More than 60 per cent of all local housing markets in the country reported increased sales activity in June compared with May, but activity was below year-ago levels in about two thirds of Canadian regions, said CREA.

Those below year-ago levels were led by British Columbia's Lower Mainland region, where sales showed signs of tempering and new listings were in decline.

The number of newly listed properties for sale fell by 1.8 per cent across the country to 70,187 in June. Calgary, Edmonton, Ottawa and Montreal were the most prominent markets to see listings take a hit.

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CREA president Barb Sukkau suggested the muted numbers stemmed from the stricter regulations introduced on Jan. 1 for uninsured mortgages.

She said the regulations were "weighing on" buyers and sales, but that the extent to which it was affecting those searching for homes was varying based on market and prices.

The national average price for a home sold in June was just under $496,000, down 1.3 per cent from a year ago.

Excluding the Greater Vancouver and Greater Toronto markets, the average price was just over $389,000 — a 0.9 per cent year-over-year decrease.

BMO Capital Markets senior economist Robert Kavcic said in a note to investors that Vancouver, and broadly B.C., are "the clear weak spots" because they've seen a 1.3 per cent slump in sales in the wake of the recent foreign buyers tax and speculation fees on vacant homes.

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He also categorized the Prairies as weak because Calgary, Edmonton and Regina all saw sales and prices below year-ago levels in June, but said higher oil prices could soon bring more confidence to buyers.

He had much more optimism for Toronto, which he said is stabilizing with sales jumping nearly 17 per cent in June, the strongest seasonally-adjusted monthly increase in more than 14 years.

"Keep in mind, however, that activity is coming off low levels not seen since the last recession," he said. "At any rate, that surge in demand has tightened up the market, even if overall conditions are still relatively soggy."

Montreal and Ottawa, he said, remain the strongest markets in the country, bolstered by strong economies and few provincial measures aimed at cooling real estate.

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