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Home Sales Activity in Canada Seen "Low" in Key Spring Season Despite April Lift, Says National Bank

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Home sales in Canada edged up by 0.7% monthly in April, the first increase in six months, said National Bank of Canada after Thursday's data from the Canadian Real Estate Association (CREA).

The improvement in sales during the month was mainly driven by an increase in transactions in Ontario (+4.3%), and to a lesser extent by increases in Prince Edward Island. (+16.6% following -17.0% the previous month) and Alberta (+3.6%).

On the other hand, sales declined in the vast majority of provinces, with decreases in Nova Scotia (-10.9%), Newfoundland (-7.4%), Quebec (-2.9%), Saskatchewan (-2.5%), New Brunswick (-1.5%), Manitoba (-1.1%), and British Columbia (-1.1%).

Despite the improvement in sales in April, the level of activity remains particularly low in the Canadian housing market, with transactions down 16.9% from their 10-year average, noted the bank.

Several factors continue to weigh on the real estate market, including population decline, the weak performance of the labor market since the start of the year, and economic uncertainty -- and now geopolitical uncertainty as well. The conflict in the Middle East has even had spillover effects on the Canadian real estate market, with mortgage rates rising in March as bond yields increased due to the rise in inflation anticipated by the markets, stated National Bank.

Looking ahead, a pickup in activity could be possible later this year if the trade uncertainty surrounding the renewal of the CUSMA trade deal is resolved, according to the bank.

In the meantime, activity levels during the peak spring season are likely to remain "low," it added.

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