House sales rise 7% in March

VIRGINIA GALT

Globe and Mail Update

April 15, 2009 at 12:20 PM EDT

The Canadian housing market appears to be stabilizing, with sales activity up in March for the second consecutive month as lower prices drew in more buyers, the Canadian Real Estate Association said Wednesday.

Actual transactions were down 13.7 per cent, year over year. This was the smallest decline in six months, the association said.

“Housing markets are starting to show signs of buyer interest because of lower prices and interest rates,” Regina real estate agent Dale Ripplinger, CREA president, said in releasing the March results.

However, economists were reluctant to characterize the increased sales activity as the beginning of a recovery in the real estate market.

The March statistics were “certainly encouraging,” Toronto-Dominion Bank economist Millan Mulraine said.

“Nevertheless, with the Canadian economy continuing to be in a very intense recession, and labour market conditions continuing to worsen at an alarming pace, we expect over-all housing market activity to remain soft in the coming months,” Mr. Mulraine said in a research note.

“That's why we are cautious about interpreting this as the beginning of a long-term trend,” he added in an interview.

A seasonally adjusted total of 31,135 existing homes changed hands in March.

“This is an increase of 7 per cent from the previous month, and builds on the 10.3-per-cent activity gain in February,” CREA said in a news release.

“The number of transactions in March stands 18 per cent above levels reported in January, 2009, when activity sank to the lowest level in a decade.”

The national average resale price was $288,641 in March, down 7.7 per cent from a year earlier – again, the smallest year-over-year decline in six months, the association said.

The largest monthly increases in activity were in British Columbia, at 13.6 per cent, and Ontario, at 10.5 per cent, the association said.

CREA's chief economist, Gregory Klump, said the sales reflected a “stronger-than-normal seasonal bounce” in a number of markets.

“The story is that price reductions are working as intended. They are stabilizing the market and they are drawing buyers …who are taking advantage of improved affordability,” Mr. Klump said, adding that anecdotal evidence indicates that a lot of the buyers are first-time market entrants.