The Canadian Real Estate Association is raising its forecast for the number of homes that will be bought and sold this year, after August’s home sales came in 11.1% higher than a year earlier.
CREA said August’s sales were 2.8% higher than July’s. It is now forecasting 449,900 sales over the Multiple Listing Service this year. It similarly raised its forecast in June, at which point it expected 443,400 homes to sell this year.
The upward revisions illustrate how the strength of the market’s rebound is catching some economists by surprise. Prior to these increases, the association had cuts its forecast three times in the face of a protracted sales slump that began in July 2012, after Finance Minister Jim Flaherty tightened the mortgage insurance rules.
Nearly half of the latest increase in the forecast stems from the market’s strength in British Columbia.
Despite the increases, the latest forecast for national home sales this year remains 1% lower than last year. So far home sales in 2013 are about 2.9% lower than during the first eight months of 2012. Only British Columbia and Alberta are expected to see higher sales levels this year.
Moreover, the association also says strength of pricier markets such as Vancouver is pulling average prices higher than expected. It expects the national average home price will rise 3.6% this year to $376,300.
The national average sale price in August came in 8.1% higher than a year ago, at $378,369. But the association said that if greater Toronto and Greater Vancouver were not included, national average prices were up by only 4.8%.
The MLS Home Price Index, which tries to present a more apples-to-apples picture that takes into account changes in the types of homes that are selling, was up 2.9%.
