Posthaste: Why Canada's housing market could be in for a 'bumpy recovery'
New data on Canada’s housing market out yesterday suggested prices might be nearing a bottom, but the recovery won’t be all smooth sailing, say economists.
The national MLS Home Price Index in February was flat month over month, ending a run of five declines that began last fall.
The shift is noteworthy, said the Canadian Real Estate Association, considering that prices dropped 1.3 per cent from December to January.
Such a sudden increase has only been seen four times in the past 20 years, all of them when “demand was coming off the sidelines,” said CREA.
“After two years of mostly quiet resale housing activity there’s a feeling that things are about to pick up,” said CREA chair Larry Cerqua.
But while improving sentiment — likely fuelled by the prospect of Bank of Canada interest rate cuts — halted the national price declines, it has not yet produced a recovery in activity, said Robert Hogue, an economist with Royal Bank of Canada.
Home sales fell 3.1 per cent in Canada between January and February, reversing about a quarter of the gains in the previous two months. With February sales still about 11 per cent below the 10-year average, the market remains subdued, he said.
Activity did pick up in Quebec and eastward. Montreal home sales were up 6.1 per cent and sales soared 27 per cent in Fredericton and 12 per cent in Saint John.
Further west, however, sales slumped, with Toronto down 12 per cent month over month, Vancouver down 7.3 per cent and Calgary off 6.6 per cent.
New listings rose for the second month in a row, suggesting that sellers are feeling more confidant. Hogue suspects some decided to hold off in the fall, and are now trying to get an early jump on the spring market.
“We think February’s developments
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