The Canadian Real Estate Association has raised its outlook for homes sales this year as it reported an 11.1 per cent jump in August sales compared with a year ago.
The industry organization said Monday that it now expects sales of 449,900 homes this year compared with a June forecast of 443,400.
CREA reported 454,573 sales in 2012.
The association said sales across the country have improved more quickly than expected, likely due “the transient influence” of buyers with pre-approved financing buying before their lower pre-approved rates expire.
Bank of Montreal chief economist Doug Porter said the gain for August also benefited from a weak month a year ago.
“Still, suffice it to say that next to no one predicted a big mid-year bounce in home sales at the start of 2013, when calls for Canadian housing market calamity were all the rage,” Porter wrote in a report.
“Contrary to the Greek chorus of woe, sales are now above their 10-year average in seasonally adjusted terms. And, the year-ago comparisons will remain quite easy for the next eight months, so settle in for a spell of potentially solid year-over-year figures even if sales do simmer down notably in coming months.”
CREA said B.C. accounted for nearly half of the increase to the 2013 forecast, while the sales outlook for across the Prairies was also raised.
The national average home price is forecast to increase 3.6 per cent to $376,300 this year, driven by gains on the Prairies and in Newfoundland and Labrador.
Price gains in B.C. and Ontario are expected to come in just below the national average while Quebec and New Brunswick are forecast to gain less than one per cent.
Prices in Nova Scotia are expected to slip less than one per cent.
“The environment for home prices in Quebec, New Brunswick, and Nova Scotia will likely be shaped by ample inventory levels relative to sales,” CREA chief economist Gregory Klump said in a statement.
“The balance between the two indicates that buyers have an abundance of listings from which to choose in those provinces, which could keep pricing prospects in check until sales draw down inventories.”
Sales in 2014 are expected to total 465,600.
For August, home sales totalled 40,350, up from 36,316 a year ago, when the federal government tightened mortgage lending rules and sent a chill through the housing market.
Since then, Canadian home sales have bounced back, helped by interest rates which, until recently, have remained near record lows.
“Recent increases to fixed mortgage rates caused sales to be pulled forward as buyers with pre-approved financing at lower rates jumped into the market sooner than they might have otherwise,” Klump said.
TD Bank economist Diana Petramala said the housing market has proven more resilient in 2013 than anticipated, but noted the recent strength needs to be kept in perspective with sales still well below their historical peaks.
“Four rounds of insured mortgage rule tightening have worked to temper home sales, which are still 11 per cent below the peak reached in late 2009,” Petramala said.
“The increase in longer-term mortgage rates is likely to keep housing demand in check.”
The national average price for a home sold in August was $378,369, up 8.1 per cent from a year ago.
If the greater Toronto and Vancouver regions are excluded from the national average price calculation, the year-over-year increase is 4.8 per cent.
CREA said 325,180 homes had been sold by the end of August, 2.9 per cent below the pace set in the first eight months of 2012.
The national sales-to-new listings ratio edged up to 54.6 per cent for August compared with 54.1 per cent in July.
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