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The Canadian Real Estate Association reports that the national average for residential real estate prices dropped last month, but sales activity increased 2.5% from February to March. The increased activity tightened the market for buyers, with Toronto, Edmonton and Calgary contributing most to transactional volume. While prices are down 0.5% on the year, prices in many urban areas are on the rise, particularly in Vancouver and Toronto. Experts say the surge in Toronto sales is having a significant impact on the national average, suggesting prices outside of metropolitan areas may not be so robust. For more on this continue reading the following article from Property Wire.

National residential property prices in Canada fell 0.5% year on year last month but market activity edged higher, according to the latest statistics released by The Canadian Real Estate Association (CREA).

Home sales rose 2.5% from February to March and actual, not seasonally adjusted, activity stood 1.6% above levels in March 2011, the smallest year on year increase since last April.

The number of newly listed homes eased 0.3% from February to March and CREA said that while still well balanced, the national housing market tightened due to the rise in activity.

Activity in March was up from the previous month in two thirds of all local markets, with Toronto, Calgary, and Edmonton contributing most to the national increase.

The activity level reflects moderate gains in a number of major centres, including Toronto, Calgary, Montreal, Ottawa, and Quebec City. Increases in these housing markets offset larger declines in Vancouver and the Fraser Valley, where activity last year ran at unusually strong levels.

A total of 108,373 homes traded hands in the first three months of the year, some 5% above the five year average for first quarter sales, 3.8% above the 10 year average, and 4.4% above activity in the first quarter of 2011.

New listings were little changed following their uptick in February, having edged lower by 0.3% on a month on month basis in March. The number of newly listed homes declined from the previous month in just over half of all local Canadian housing markets, and rose in almost all of the remainder.

‘The spring housing market is off to a good start. The numbers of sales and newly listed properties are up from levels last year, and the vast majority of housing markets remain balanced,’ said Wayne Moen, CREA’s president.

The national sales to new listings ratio, a measure of market balance, stood at 55.1% in March. This remains firmly in balanced market territory, but is up from 53.6% in February. Based on a ratio of between 40 and 60%, more than half of local markets were balanced in March.

The number of months of inventory stood at 5.7 at the end of March on a national basis, down slightly from 5.8 months in February. The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is another measure of the balance between housing supply and demand.

The actual, not seasonally adjusted, national average price for homes sold in March 2012 was $369,677, representing a decline of 0.5% from the same month last year.

‘Average prices are up from year ago levels in most large urban centres. The slight decline in the national average price points to a tug of war between Toronto and Vancouver from the standpoint of their sales mix compared to last year,’ explained Gregory Klump, CREA’s chief economist.

‘The national average price was skewed higher last spring by record level high end home sales in some of Vancouver’s priciest neighbourhoods. It was expected that this would not recur this spring, which the latest sales figures confirm. The decline in average price reflects the change in Vancouver’s sales mix, not housing price deflation,’ he said.

‘At the same time, overall home sales activity in Toronto is stronger than it was last spring, and higher end home sales are up from year ago levels. Being by far the most active housing market in Canada, Toronto represents the single biggest factor supporting national average price compared to last year,’ he added.

This article was republished with permission from Property Wire.