Update on the Real Estate Market

Resales of Canadian homes show continued strength in August

By The Canadian Press

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OTTAWA - Resales of Canadian homes held steady and the national average price soared in August as the supply of existing homes for resale dwindled to a five-year low, the Canadian Real Estate Association said Tuesday.

A total of 42,483 homes traded hands across the country last month through the Multiple Listing Service, an increase of 18.5 per cent from August 2008, the industry association said.

The national MLS residential average price rose 11.3 per cent from year-ago levels to $324,779, a record high for the seasonally slow month of August.

Sales activity varied in various parts of the country, with about three-quarters of all local market showing increases from August 2008.

The number of new listings coming onto the MLS market posted a decline from year-ago levels, with August showing the lowest level in five years at 64,167 units.

The lack of supply is putting pressure on would-be buyers and as a result the average prices tracked by MLS set records for August in every province except Alberta, according to CREA figures.

The MLS is a co-operative marketing system run by Canada's real estate boards and used only by member realtors.

While seasonally adjusted activity in Alberta and Quebec declined last month, it still remained about 60 per cent above the decade-low in January.

"National sales activity in the third quarter is on track for a significant increase compared to the second quarter," said CREA President Dale Ripplinger.

"Low interest rates and affordability continue to attract home buyers to the housing market. Consumer confidence continues to rise, which bodes well for activity in the coming months."

Canadian housing prices and sales volumes plunged last year after the global credit crunch plunged the country into one of the deepest recessions since the Second World War, resulting in job losses, unemployment and consumer fear.

The Bank of Canada and other central banks around the world have responded to the crisis by lowering short-term interest rates and making it easier for commercial mortgage lenders to gain access to funds to lend to consumers.

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