Canadian home prices rose a record 3.5% in February, with transactions increasing 4.6% during the month, according to data from the Canadian Real Estate Association (CREA).
Buyers are flooding into the housing market ahead of what’s expected to be an aggressive set of interest rate hikes from the Bank of Canada.
Although new listings increased sharply in February, the surge in sales left inventory levels at record lows with just 1.6 months worth of supply in the market, CREA’s data shows.
The Bank of Canada raised its benchmark interest rate for the first time in more than two years earlier this month, a widely expected move that was accompanied by warnings of more interest rate increases to combat inflation that is at a 30-year high.
Record low interest rates and demand for larger living spaces during the pandemic triggered a buying frenzy in Canada’s housing market that’s left it as one of the world’s most unaffordable.
February’s frenzied pace indicates that the spring buying season may bring more sellers to the housing market. The number of new listings surged 24% from January this year. Demand was so strong during February that the ratio of sales to new listings, a measure of market tightness, was far above the historical norm.
