April 15, 2010 – Reuters.com

TORONTO (Reuters) - Sales of existing homes in Canada climbed 1.4 percent in March from the month before, while a rise in new listings pointed to a more balanced housing market, the Canadian Real Estate Association said on Thursday.

The industry group said a total of 43,621 homes changed hands on a seasonally adjusted basis in March, boosted by strong activity in the Toronto and Ottawa markets, which more than offset a decline in activity in Vancouver that was possibly due to the Winter Olympics.

The increase in listings has created less of a buying frenzy than last year when demand was high and supply was short -- which pushed prices higher and fed debate about whether there was a housing bubble in the making.

"After a blistering supply-starved recovery, Canada's housing market is gradually returning to balance," said Robert Kavcic, an economist at BMO Capital Markets.

Nearly 100,000 homes were listed during March, up 20 percent from a year ago, CREA said, bringing the total new listings to a first-quarter record of 233,402.

"The rise in new listings means that buyers may shop around more before making an offer," said CREA President Georges Pahud.

Still, the national average price in March was C$340,920, up 17.6 percent from a year earlier and just C$300 below the peak set last October.

With the advent of tighter mortgage rules and new sales tax regimes later this year in the busy Ontario and British Columbia markets, as well as expected interest rate hikes, market watchers expect a burst of spring sales but a more moderate pace in the second half.

"We should not misread that temporary uptick for a sustainable trend that will carry through the whole year, as it essentially borrows from future demand. A better reading of the true strength of sales can be made after this policy-induced volatility washes out," said Pascal Gauthier, an economist at TD Bank.

On a year-over-year basis, sales were up 40.8 percent, smaller than the increases of the previous five months, and falling in line with expectations that year-over-year comparisons will continue to shrink in the months ahead.

Low consumer confidence brought the Canadian resales market to a virtual standstill during the global financial crisis, with it hitting bottom in January 2009.

But buyers quickly returned to the market, taking advantage of record low interest rates, and the housing sector has since become one of the pillars of the nation's economic recovery.