Canadian home sales sprang to life in May, coming in 4.8 per cent higher than a year earlier, according to data released by the Canadian Real Estate Association on Monday.
Poor weather caused a slow start to the all-important spring home-selling season this year, but the market showed significant momentum last month.
The number of existing homes that changed hands over the Multiple Listing Service rose 5.9 per cent from April on a seasonally-adjusted basis, CREA said. That is the highest month-to-month increase in almost four years. It is the fourth consecutive increase in sales from the prior month, after five months in which sales kept dropping.
The numbers surpassed what economists had been expecting based on preliminary May data that had been released by some local real estate boards across the country (the real estate boards and CREA represent realtors and track sales that occur over the MLS).
Bank of Montreal economist Benjamin Reitzes was watching for sales to climb 2.5 per cent year-over year. And even that would have been a strong showing.
“The housing market remains remarkably resilient,” he wrote in a research note before the data was released. “Not coincidentally, mortgage rates have fallen once again, with sub-3 per cent rates on offer.
“Indeed, as long as rates remain at rock-bottom levels, housing isn’t like to weaken much, if at all.”
CREA suggested that the large number of sales in May is largely making up for weaker activity in the prior months, and it doesn’t expect the momentum to last.
It updated its annual forecast and said it is now expecting 463,400 homes to change hands this year. That’s actually down from its forecast in March, when it said it expected 463,700 sales.
On the other hand, it now expects prices to climb further. It predicts that the national average home price will rise 5.7 per cent this year to $404,300. In March it was forecasting a 3.8 per cent increase to $397,000.
The national average sales price was up 7.1 per cent in May from a year earlier. Averages can be distorted, for instance by a higher level of sales in a pricey neighbourhood. The MLS Home Price Index, which seeks to be a more apples-to-apples comparison of prices, was up 5 per cent.