TORONTO -- Home sales accelerated in May to their highest level in more than five years, as some home buyers looked to preempt an increase in mortgage insurance premiums.
The Canadian Real Estate Association said Monday sales last month through its MLS system were up 3.1 per cent from April, marking the fourth consecutive month-over-month increase.
Sales in the Toronto area grew by 4.1 per cent in May compared with the previous month, while sales in Calgary climbed 6.7 per cent and Ottawa gained 6.2 per cent.
CREA president Pauline Aunger says news that CMHC will be increasing mortgage default insurance premiums for home buyers with less than a 10 per cent down payment effective June 1 could have impacted home sales.
"Some buyers may have jumped off the fence and purchased in May to beat the increase," Aunger said in a statement.
CREA chief economist Gregory Klump says a rebound in sales in Calgary and Edmonton, which posted a 3.2 per cent month-over-month gain, suggests uncertainty stemming from low oil prices could be easing.
The association also revised its outlook for the full year upwards to reflect better-than-expected sales in British Columbia.
CREA now anticipates that national home sales will climb to 487,200 units this year, 1.3 per cent higher than last year.
Compared with a year ago, sales across the country in May were up 2.7 per cent, led by Vancouver, Toronto and Montreal.
The national average price for a home sold in May was $450,886, up 8.1 per cent from a year ago. Excluding the red-hot markets of Toronto and Vancouver, the average price of a home gained 2.4 per cent to $344,988.
The aggregate composite MLS home price index was up 5.2 per cent from a year ago to $493,100.
The Canadian Real Estate Association says the home price index is a better measure of price trends than the average selling price because the index is not affected by changes in the mix of sales activity.
TD Bank economist Leslie Preston said a recent rise in government bond yields could push mortgage rates higher this year, dampening demand for real estate across the country.
"Overall, though, we expect the regional divide to continue," Preston said in a statement.
"While sales in oil-related markets of Edmonton and Calgary have risen off their January lows, price gains remain modest. The Vancouver and Toronto markets should cool slightly on higher interest rates, however. Given the tightness in these markets, prices should remain relatively strong."
Preston anticipates that house price gains will slow next year to around two to three per cent.
