Business

Canada's home sales rebound in June

Canadian home sales jumped in June for the first time in three months, according to figures released Friday.
Canada's national realty association is now forecasting a drop in housing sales for all of 2011, down 1.3 per cent compared to 2010. The group then expects the sector to rebound, with activity growing 2.6 per cent in 2012. (Geoff Howe/Canadian Press)

Canadian home sales jumped in June for the first time in three months, according to figures released Friday.

The Canadian Real Estate Association (CREA) said the number of homes that changed hands nationally grew by 2.6 per cent last month. 

That performance was a marked improvement compared to May, when housing sales slid approximately one per cent, and April, when home buying activity tumbled even more, down 4.4 per cent.

"The rise in monthly home sales activity at the end of the second quarter, upbeat business sentiment and hiring intentions, and signs that the Bank of Canada is in no rush to raise interest rates bode well for home sales activity and prices going into the second half of 2011," said Gregory Klump, CREA's chief economist.

Sales slump

Considering the second quarter as a whole, however, sales activity slipped by almost five per cent compared to the first quarter of 2011.

Canada's national realty association is now forecasting a drop in housing sales for all of 2011, down  1.3 per cent compared to 2010. The group then expects the sector to rebound, with activity growing 2.6 per cent in 2012.

Canada's continued economic recovery and the country's historically low interest rates have put some lift into the housing sector. Those factors, however, have been outweighed by the Bank of Canada's continued fretting over mortgage debt and Ottawa's new rules designed to squeeze out risky home buyers, CREA noted.

Price bounce

The country's second quarter housing roller-coaster, however, did not put the brakes on home prices, which continued to rise.  The average price of a home nationally rose 8.7 per cent in June compared to May, reaching $372,700.

CREA predicts that home prices for 2011 will rise four per cent and less than one percentage point in 2012.

By contrast, American prices for new homes are expected to rise 1.6 per cent in 2011 while the average value of an existing house in the United States — a different market than the new house segment — could drop by almost 2.5 per cent in the same 12-month period.