Canadian home sales rise in February, forecast trimmed

Reuters

By Andrea Hopkins

TORONTO, March 17 (Reuters) - Sales of existing homes in Canada edged higher in February from January, the first monthly increase after five straight declines, the Canadian Real Estate Association said on Monday, but it trimmed its sales forecast for this year.

The industry group for Canadian real estate agents said home resales were up 0.3 percent last month from January, seasonally adjusted. On a year-on-year basis, sales rose 1.9 percent from February 2013, not seasonally adjusted.

Canada's housing market slowed in the final months of 2013 and analysts are waiting to see whether sales will rise again in the spring, the traditional start to the home-buying season. The number of sales in February was 9.3 percent below the peak reached in August 2013, but prices have generally continued to tick higher.

In a separate report, CREA cut its forecast for 2014 sales to 463,700 units, a 1.3 percent increase from 2013. In its previous quarterly forecast in December, CREA had expected sales of 475,000 units in 2014, a 3.7 percent increase from 2013.

The group forecast 2015 sales at 469,400, up a further 1.2 percent.

Canada escaped the U.S. housing crash after the 2008-09 financial crisis and home prices have risen dramatically, if not steadily, in the past five years despite federal government moves to tighten mortgage lending rules.

While some economists have predicted the Candian market will crash, most have said they expect sales and new construction to level off in 2014 and 2015 as mortgage rates rise, with prices continuing to tick slowly higher.

"(CREA's) forecast for 2014 is broadly consistent with our own slightly more constructive estimate of 2.3 percent, but we see sales effectively flat in 2015," Mazen Issa, senior Canada macro strategist at TD Securities, said in a research note.

CREA said it expects the national average home price to rise 3.8 percent to C$397,000 ($358,100) in 2014, and rise a further 1.1 percent in 2015 to C$401,400.

CREA's home price index rose 5.1 percent from February 2013, a slight acceleration from January's 4.8 percent gain.

The number of regional housing markets where February sales were up ran roughly even with the number of markets where sales declined, with little change in activity in most large urban markets, the group said.

"Sales in February rebounded in some of the smaller local markets where activity was impacted by harsh winter weather in January," CREA President Laura Leyser said in the report.

"The strength of sales activity during the crucial spring market period will be influenced by the availability of listings, which varies considerably from market to market."

The number of newly listed homes was up 0.6 percent in February from January. As with sales, there was a roughly even split between the number of local markets where new listings were up from the previous month and those in which they were down, the report showed.

The national sales-to-new listings ratio was 52.1 percent, little changed from 52.3 percent in January. Since early 2010, the ratio has remained within a range of 40 to 60 percent, which marks balanced territory.

The national average price for homes sold in February, not seasonally adjusted, was C$406,372 ($366,500) an increase of 10.1 percent from the same month last year.

CREA's home price index, up 5.1 percent, from a year earlier, provides a better gauge of price trends because it is not affected by changes in the mix of sales activity the way that average price is.

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