Canada's housing industry showed signs of life in February after several months of declines, with resales rising 8.6% from January thanks to lower mortgage rates and prices, the Canadian Real Estate Association reported yesterday.
Despite February's gains, sales are still down 31% year over year and prices have fallen 9.2% in the past 12 months, CREA said.
"It looks like the Category 5 hurricane which had been pounding the home-resale market has been downgraded to 'just' a Category 4," said Douglas Porter, an economist at BMO Capital Markets.
A total of 28,669 homes changed hands in February on a seasonally adjusted basis via the industry group's Multiple Listing Service. That marks the first month-to-month uptick in home-resale activity since September, 2008.
"Typically, the spring market we're moving into generates more activity, and this year there are the benefits from historically low mortgage rates and improved affordability in most markets," said Calvin Lindberg, the president of CREA.
CREA cautioned that listings remain high, although the number is trending lower, with 65,060 units listed for sale in February, down 10.9% from the same month a year ago.
"The housing supply is expected to continue easing, but it will take time before it realigns with lower demand," said CREA chief economist Gregory Klump.
"Economic uncertainty is keeping home buyers in a cautious mood, so homes are taking longer to sell than in recent years. Lower sales activity at the higher end of the
price spectrum will keep the national MLS residential average price under downward pressure."
The national average price for home sales via the MLS was $281,972.
Mortgage rates, meanwhile, are near historic lows. On Friday, for instance, TD Canada Trust lowered its seven-year fixed mortgage rate by 0.2 points to 6.8%.
CREA said February's 9.2% annualized price decline is smaller than year-over-year drops posted in the past four months and is the first time the pace of decline has decelerated since turning negative in July, 2008.
"The report does offer some hope that the decline in Canadian home prices may have stabilized somewhat in February after appearing to have accelerated in the latter months of 2008," said TD Securities economics strategist Millan Mulraine.
"Not surprisingly, the biggest declines in prices were in Calgary (down 10.8% year over year), Greater Vancouver (down 13%) and Windsor (down 15.7%). However, prices in Toronto (down 5.4%) were also lower, while prices in Montreal (up 2.2%) and Quebec City (up 9.3%) continue to rise, albeit at a more modest clip," Mr. Mulraine said.
Nevertheless, Mr. Porter added, "Even with a moderate improvement in February home sales from the exceedingly weak levels around the turn of the year, it's still a clear-cut buyer's market in most regions of the country. And that doesn't look likely to change any time soon."
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