By Ismail Shakil
OTTAWA (Reuters) - Greater Toronto area home sales jumped in January while new listings increased more slowly, in a tightening of market conditions that could lead to a resurgence in house prices in the coming months, data showed on Tuesday.
Sales surged 37% on an annual basis as some home buyers started to benefit from lower borrowing costs associated with fixed-rate mortgages, while new listings increased 6.1% from January 2023, according to Toronto Regional Real Estate Board (TRREB) data.
"Once the Bank of Canada actually starts cutting its policy rate, likely in the second half of 2024, expect home sales to pick up even further," TRREB Chief Market Analyst Jason Mercer (NASDAQ:MERC) said in a statement.
On a seasonally adjusted basis, sales rose 9.6% month-on-month in January, the second consecutive increase after a 19.5% growth in December. Seasonally adjusted new listings increased 4.6% in January after a 12.7% decline in the previous month.
The seasonally adjusted average home price fell 6.5% in January from December to C$1,062,111 ($784,599).
"There will be more competition between buyers in 2024 as demand picks up and the supply of listings remains constrained. The end result will be upward pressure on selling prices over the next two years," Mercer said.
The central bank has held its key overnight rate at a 22-year high of 5% since July to cool inflation, but the bank said last month its focus is shifting to when to cut borrowing costs rather than whether to hike again.
While recent data, including an uptick in the inflation rate in December, has dampened hopes for a rate cut in the first half of 2024, money markets still have a 25-basis-point cut fully priced in for July.
($1 = 1.3537 Canadian dollars)