Canada's housing market continues to show signs of stability as the number of homes sold so far this year has come in slightly higher than projected, a possible signal that the market is set for a rebound in 2014, according to the Canadian Real Estate Association.
The industry group representing Canadian realtors reported Monday that although it still expects fewer sales to be logged this year than in 2012, the decline will be smaller than what was predicted in March.
Overall, it forecasts that there will be more sales next year than in 2013 and 2012.
Douglas Porter, chief economist with BMO Capital Markets, said the figures show that the doom and gloom that has been anticipated for the Canadian housing sector looks like it's been delayed — at least for the near future.
"Overall, this is relatively encouraging news," he said. "If anything, the surprise has been how healthy the housing market has been."
CREA is now estimating that 443,400 units will be sold in 2013 , a decline of 2.5 per cent from 454,573 in 2012. It had previously projected a decline of 2.9 per cent from 2012.
The group reported that sales activity began to pick up at the end of the first quarter and accelerated in the second quarter. It projects that 2014 will see a strong rebound, with 464,300 housing units sold — about 9,700 more than last year.
It said the drop in transactions in the second half of 2012 can be attributed to stricter mortgage rules for lenders and buyers introduced by the federal government last summer.
"It affected a lot of first-time homebuyers, particularly in some of Canada's more expensive markets," said Gregory Klump, CREA's chief economist. "We had a pretty substantial decline in sales activity."
CREA also reported that last month, there were 51,764 residential properties sold across Canada, down 2.6 per cent from May 2012.
On a month-to-month basis, May showed a 3.6 per cent increase from April with 37,792 units and 36,473 units sold on a seasonally adjusted basis in the first two months of the second quarter — the largest month-to-month gain in more than two years.
Porter said the stronger-than-expected figures are another indicator that the Canadian economy is faring well.
"The overall message is that there is still some strength in the economy. This has gone hand in hand with better job news and some more encouraging reports generally," he said.
"I wouldn't say the economy is booming by any stretch of the imagination but I think the main point is that it's holding up better than many had expected as recently as a couple of months ago."
The association also reported that its home price index was up 2.3 per cent in May, compared with a year earlier. That was slightly better than April's HPI of 2.2 per cent but still near two-year lows.
The May national average price, for all types of property in major markets across Canada, was $388,910 — up 3.7 per cent from a year earlier. Almost all of the local markets that make up the average saw year-to-year increases.
The group noted that it expects Alberta and Prince Edward Island to see a rise in the number of home sales this year, while other provinces will continue to see declines compared to last year.