National home sales jumped by 11.3 per cent between March and April as the real estate market picked up again, but supply remained at a 20 year-low, the Canadian Real Estate Association said Monday.
Seasonally-adjusted sales for the month totalled 38,164 compared with 34,277 in March.
The actual number of homes sold last month amounted to 44,059, down 19.5 per cent from a year prior.
The year-over-year sales decline was markedly smaller than the drops reported in recent months, the association said, attributing the return of sales to home prices, which many feel have bottomed out in recent months as interest rates climbed eight times over the last year.
"It wasn’t all that surprising to see buyers jumping off the sidelines and back into the market in April,” Shaun Cathcart, CREA’s senior economist said in a press release.
“Supply, on the other hand, has been sluggish, hence the price gains from March to April seen all over the country."
The seasonally-adjusted number of new listings edged up 1.6 per cent to 54,355 in April from March. The actual number of new listings was 67,472, about 26 per cent lower than a year ago.
However, the first week of May, which is not included in CREA's April data, showed a burst of new supply, said Cathcart.
He believes the May uptick suggests many April buyers were existing homeowners that are now looking to sell their current homes.
"That could make for the kind of virtuous circle that might ultimately get more first-time buyers into the ownership space this year," he said.
Those who waded into the market last month found last month's seasonally-adjusted average price hit $695,887, up 5.7 per cent from March.
The actual average home price was roughly $716,000 in April, down 3.9 per cent from April 2022, but up $103,500 from January 2023.
CREA attributed the gains seen since January to "outsized sales rebounds" in the Greater Toronto Area (GTA) and B.C.'s Lower Mainland, which tend to be hot markets.
Excluding the GTA and Greater Vancouver from the calculation cuts more than $144,000 from the actual national average price, CREA said.
"An improving demand backdrop is helping boost home prices, even as affordability remains significantly strained," Rishi Sondhi of TD Economics said in a note to investors.
"However, subdued supply is probably playing an even larger role in pushing prices higher."
CREA's national housing data was released the same day as Canada Mortgage and Housing Corp. published housing starts figures that showed the annual pace of starts in April rose 22 per cent compared with March.
Housing starts are a measure of when construction on homes begins and a key indicator of how Canada is addressing housing supply gaps.
"The snapback in sales, the firming in prices, and the bounce in starts in April all suggest that the housing market has found a floor," said Douglas Porter, chief economist with BMO Capital Markets, in a note to investors.
He felt more clarity around interest rates along with the underlying resiliency of the economy, which has seen persistent strength in jobs, played a role in April's market.
"As we have often pointed out, if housing — the most interest-sensitive and cyclical sector of the economy — is showing a renewed pulse, it begs the question of whether monetary policy is nearly tight enough," he said.
"While we don't look for further rate hikes by the Bank of Canada, renewed strength in housing certainly aims the risks squarely in that direction."
This report by The Canadian Press was first published May 15, 2023.
Tara Deschamps, The Canadian Press
