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Canadian home prices were flat in February after falling for five straight months, a potential sign that the country’s housing market may be rebounding after last year’s slump.

The national home price index, which excludes the highest priced properties, was $719,400 last month, which was the same as in January, according to the Canadian Real Estate Association, or CREA.

The last time the home price index rose was from July to August last year, a month after the Bank of Canada shocked the market with back-to-back interest-rate hikes. The surprise move had led to a slowdown in sales and a drop in home prices as many would-be homebuyers had a tougher time qualifying for a large enough mortgage to make a purchase.

But now that the central bank has kept its benchmark interest rate steady at 5 per cent for more than six months, would-be buyers are starting to gain confidence that borrowing costs will no longer continue to rise. Prospective buyers who delayed their purchases last year are starting to look again and make bids. The real estate industry said there is pent-up demand after months of lacklustre activity.

“People are itching to get going,” said Samantha Villiard, regional vice-president for RE/MAX real estate agency. “More people are slowly getting comfortable getting back into the market,” she said.

Realtors have reported an increase in showings and bids in areas that experienced heavy competition during the pandemic’s real estate boom. That includes the suburbs of Toronto and Chilliwack, inland of Vancouver. Over the past month, the home price index rose in Oakville, Milton, Hamilton and Burlington, as well as Chilliwack.

At the same time, the home price index continued to fall in other markets that overheated when interest rates were nearly zero. That includes some parts of Ontario’s cottage country and less populous cities such as Guelph.

Across the country, home sales fell 3.1 per cent from January to February after removing seasonal influences. British Columbia and Ontario, the country’s largest real estate markets, led the way down with homes sales declining 7 per cent month over month in both. That followed a flurry of sales in December and January. Last month’s volume of sales is still higher than in the fall when homebuyers were still adjusting to the higher interest rates.

TD economist Rishi Sondhi said that activity is still below prepandemic days owing to lower sales in Ontario, British Columbia and Quebec. “This suggests that significant pent-up demand remains in these markets,” he said in a research note.

New listings rose 1.6 per cent from January to February with more homeowners putting their properties up for sale in British Columbia and Alberta.

Editor’s note: This article has been update to clarify that Chilliwack is located inland of Vancouver.

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