Canadian housing market rebounds as prices rise

Home sales in Canada increased in June for the third straight month, according to the Canadian Real Estate Association, as the average Canadian home price rose to 4.8 per cent.

Sales were down 0.6 per cent from the same time a year ago, but increased 3.3 per cent from May, according to the association.

The report has "all but erased any threat of an imminent melt in prices", according to Robert Kavcic, senior economist at BMO Capital Markets.

Other analysts echoed Kavcic's remarks.

"The Canadian existing home market has almost fully shaken off the negative impact from tighter mortgage insurance rules implemented almost a year ago," Diana Petramala, economist with TD Economics, said in a note.

"While rising rates may temper demand in the months ahead, the strength in home sales over the last four months helps to ease concerns that the Canadian housing market is headed for a deeper correction."

So far this year, 240,068 homes have sold in Canada this year through the association's multiple listing service, down 6.9 per cent from the first half of 2012.

The market also improved in regional markets across Canada, with a rise in salesin two-thirds of cities analyzed by CREA.

When compared with sales last June, Toronto and Montreal saw fewer sales, while Western markets includingVancouver, Calgary and Edmonton wereup.

The MLS home price index, which uses a weighted composite of housing prices from around Canada, rose 2.3 per cent in June from a year earlier.