According to statistics released today by The Canadian Real Estate Association (CREA), national home sales recorded a second consecutive month-over-month increase in February 2016.

Highlights:

• National home sales rose by 0.8% from January to February.
• Actual (not seasonally adjusted) activity was up 18.7% compared to February 2015.
• The number of newly listed homes edged up by 0.5% from January to February.
• The Canadian housing market has tightened but remains balanced overall.
• The MLS^® Home Price Index (HPI) rose 8.5% year-over-year in February.
• The national average sale price rose 16.4% on a year-over-year basis in February; excluding British Columbia and Ontario, it declined by 1.4%.

The number of homes trading hands via Canadian MLS^® Systems rose by 0.8 percent in February 2016 compared to January. The monthly increase lifted national sales activity to the highest level since June 2007.

A greater number of local housing markets posted a monthly decline in sales activity than posted a monthly increase; however, the latter accounted for a larger share of national transactions. The Greater Toronto Area (GTA), Okanagan Region and Fraser Valley made the largest contribution to the monthly increase in national sales activity, offsetting monthly sales declines in Edmonton, Greater Moncton and Montreal.

“Two of Canada’s hottest housing markets look set to stay that way heading into the spring home buying season,” said CREA President Pauline Aunger. “Meanwhile, other major urban markets elsewhere in Canada are well balanced or have ample supply. All real estate is local, and REALTORS^® remain your best source for information about sales and listings where you live or might like to in the future.”

Actual (not seasonally adjusted) sales activity rose 18.7 percent on a year-over-year basis in February 2016, standing 12.7 percent above the 10-year average for the month. Activity increased above year-ago levels in February in about three-quarters of all local markets. B.C.’s Lower Mainland, the GTA and Montreal contributed most to the year-over-year increase in national activity.

“The number of single family home sales above one million dollars is rising in Greater Vancouver and the GTA,” said Gregory Klump, CREA’s Chief Economist. “Tightened mortgage regulations apply to homes selling above five hundred thousand dollars and below a million dollars. The tighter regulations combined with a short supply of single family homes will restrain transactions below one million dollars. If recent trends continue, home sales above one million dollars will account for a greater share of activity and will further fuel year-over-year average price increases in these markets. Meanwhile, price growth will remain more modest in other housing markets that don’t have an ongoing or developing supply shortage like the kind we’re seeing in the Lower Mainland of British Columbia or around the GTA.”

The number of newly listed homes edged up 0.5 percent in February 2016 compared to January. The rise in new listings in the Lower Mainland of British Columbia, York and Mississauga Regions of the GTA and Hamilton-Burlington helped to push the national figure higher. Monthly increases in new listings in these housing markets were offset by monthly declines in Central Toronto, Calgary and Montreal.

The national sales-to-new listings ratio rose to 59.5 percent in February 2016 versus 59.3 percent the previous month. This marks the ratio’s highest reading since November 2009. A sales-to-new listings ratio between 40 and 60 percent is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was within this range in about 45 percent of all local housing markets in January. A little over one third of all local housing markets recorded a ratio above 60 percent; as in recent months, virtually all these housing markets are located in British Columbia and Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 5.2 months of inventory on a national basis at the end of February 2016, the lowest level in nearly six years. The national figure is being pulled lower by increasingly tighter housing markets in B.C. and Ontario. The number of months of inventory is currently sitting at or below two months in the Lower Mainland of British Columbia, the GTA, St. Catharines, Brantford, Oakville-Milton and Guelph.

The Aggregate Composite MLS^® HPI rose by 8.49 percent on a year-over-year basis in February 2016 – the largest gain since June 2010. Year-over-year price growth accelerated among all property types tracked by the index.

Two-storey single family homes again posted the biggest year-over-year price gain (+10.54 percent), followed by townhouse/row units (+7.41 percent), one-storey single family homes (+7.38 percent), and apartment units (+6.34 percent).

Year-over-year price growth continued to vary widely among housing markets tracked by the index.

Greater Vancouver (+22.18 percent) and the Fraser Valley (19.39 percent) posted the largest gains, followed by Greater Toronto (+11.30 percent). Meanwhile, year-over-year price growth in Victoria accelerated to almost 10 percent in February while Vancouver Island home price growth picked up slightly to 5.7 percent. By contrast, home prices retreated by about three-and-a-half percent on a year-over-year basis in Calgary and by about three percent in Saskatoon. Year-over-year price growth climbed out of negative territory in Regina for the first time in close to three years in February. Additionally, home prices edged higher on a year-over-year basis in Ottawa (+0.82 percent) and rose modestly in Greater Montreal (+1.67 percent). Price growth also strengthened further in Greater Moncton (+6.97 percent).

The MLS^® Home Price Index (MLS^® HPI) provides a better gauge of price trends than is possible using averages because it is not affected by changes in the mix of sales activity the way that average price is.

The actual (not seasonally adjusted) national average price for homes sold in February 2016 was $503,057, up 16.4 percent on a year-over-year basis.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are Canada’s most active and expensive housing markets. If these two housing markets are excluded from calculations, the average is a more modest $355,235 and the year-over-year gain is reduced to 8.7 percent.

Even then, the gain reflects a tug of war between strong average price gains in housing markets around the GTA and the Lower Mainland of British Columbia versus flat or declining average prices elsewhere in Canada. If British Columbia and Ontario are excluded from calculations, the average price slips even lower to $291,510, representing a decline of 1.4 percent year-over-year.