“The 10.1% cumulative rise in home resales in the past two months should be seen only for what it is: making up for activity that did not materialize earlier this year,” RBC’s latest monlthy housing market update states. “We believe that May’s level of resales— which was 4.9% higher than the 10-year average—for the most part represents a temporary burst that will not sustained much longer because there is minimal pent-up demand to satisfy.”
Home resales jumped 5.9 per cent between April and May to 489,600 units. The surge followed a 4 per cent gain in April and, year-over-year, May’s sales were up 4.8 per cent.
The reason for the spike in sales, according to RBC, was due to standard seasonal trends that see winter weather giving way to warmer weather and a willingness – on buyers’ part – to ramp up their search for a home.
RBC expects home prices to rise by 3.4 per cent, nationally, in 2014; marking an end to the price surge seen across the country over the past year.
“The more recent evidence on the prices front leads us to believe that the acceleration that we saw since last summer likely has run its course,” the report states. “The MLS HPI appears to have peaked at 5.0% (year-over-year) nationally and with supply now incr easing more substantially, the trend is likely to decelerate from now on.”
Brokers shouldn’t read too much into CREA’s positive monthly stats, according to one major bank.