Canada’s housing market is gaining momentum, with sales in April jumping 11.3 percent over March levels, according to the Canadian Real Estate Association (CREA).

However, as sales activity surged month-to-month, new inventory trails far behind, increasing only 1.6 percent, which marks a 20-year low.

Modest back-to-back gains in sales activity in February and March opened the door on the traditionally busy spring market.

Year-over-year, actual (not seasonally adjusted) monthly activity was down by 19.5 percent in April. While this is still a large drop compared to last year’s levels, this decline was not as steep as it has been in recent months, suggesting the market is regaining ground.

The actual (not seasonally adjusted) average price was $716,000 in April, down 3.9 percent from a year prior, but progressively tighter market conditions have pushed the average price up by $103,500 since January 2023.

The Home Price Index (HPI) was up by 1.6% from the month prior, which is a significant monthly increase, according to CREA. Notably, this increase was spread nationally, with monthly price increases reflected in the majority of local markets. The HPI is down 12.3 percent year-over-year.

Gains are led by the BC lower mainland and the GTA, markets long beleaguered by a mismatch of supply and demand pushing prices up.

Driving current market activity, buyers have had time to factor higher interest rates into their budgeting and lower housing prices are enticing them to purchase. Meanwhile, sellers are not keen to offload their properties for what they perceive to be discounted values.

Until sellers engage more actively, upward pressure on housing prices will continue, eroding affordability in a number of areas in the country.

“With interest rates at a top, and home prices at a bottom, it wasn’t all that surprising to see buyers jumping off the sidelines and back into the market in April,” said Shaun Cathcart, CREA’s senior economist.

“Supply, on the other hand, has been sluggish, hence the price gains from March to April seen all over the country,” he says.

There is hope that current sales activity is indicative of a shift on the property ladder, which could see much-needed supply for first-time homebuyers begin to infuse the market.

“Looking ahead, the first week of May did see a bit of a burst of new supply, suggesting some of those April buyers were existing owners now looking to sell their current homes. That could make for the kind of virtuous circle that might ultimately get more first-time buyers into the ownership space this year,” says Cathcart.

National Home Sales Jump Significantly in April, Up 11.3% by Heather Wright | Livabl