Canada's housing resale market is showing signs of recovery, with recent gains largely fueled by a resurgence in activity in the province of Ontario, the country's largest real estate market, said National Bank of Canada Capital Markets in a note on Thursday.
Home sales in Canada jumped by 5.5% from April to May, the second rise in a row following five months of decline, wrote the bank. This "robust" advance in sales was driven by increases in eight of the 10 provinces.
Ontario, which saw an 8.8% month-over-month climb in sales, contributed the bulk of the national improvement, stated National Bank. According to market data, 71% of the increase in home sales recorded between March and May originated in Ontario.
The recent uptick signals that Canada's resale housing market may have reached its low point and is beginning to move higher, added the bank. A decline in home prices has made housing more affordable, encouraging prospective buyers to return to the market.
"However, the extent of this recovery is likely to be limited by fixed mortgage rates, which have risen significantly since February, the declining population, and the ongoing uncertainty surrounding the renewal of the USMCA. In the meantime, it should be noted that despite the improvement seen in recent months, transaction volumes in the resale market remain low by historical standards, standing 11.4% below their 10-year average," the note said.