(Adds inventory, price detail; analyst comment)
By Andrea Hopkins
TORONTO, Nov 17 (Reuters) - Sales of existing homes in Canada edged higher in October from September, the Canadian Real Estate Association said on Monday, suggesting the housing market was carrying momentum into the traditionally slower winter months.
The industry group for real estate agents said sales rose 0.7 percent last month from September. Actual sales for October, not seasonally adjusted, were up 7.0 percent from October 2013.
CREA’s home price index rose 5.5 percent from October 2013. The national average price, not seasonally adjusted, was C$419,699 ($371,054), up 7.1 percent from October 2013.
“Overall not a bad reading on the Canadian housing market, with lower (borrowing) rates still likely providing support,” Nick Exarhos, economist at CIBC World Markets, said in a research note.
Sales in September had declined from August, and analysts had been forecasting a slowdown in home sales and building this year after about five years of rising sales and prices, which had raised fears a housing bubble.
“In many markets that have undergone a correction, sales activity looks to have picked up again over the past few months, adding to the excesses that already exist in the household sector,” Mazen Issa, senior Canada macro strategist at TD Securities, said in a research note.
But mortgage rates remain at historic lows, with homebuyers able to get a five-year fixed rate, the most common mortgage product in Canada, for less than 3 percent.
“Until the Bank of Canada lifts the overnight rate, which still looks to be at least a year away, borrowing rates will continue to remain near historical lows, and the housing market should remain well supported,” Issa said.
CREA said October sales were up from year-earlier levels in about 70 percent of local markets, led by Vancouver, the Fraser Valley in British Columbia, Victoria, Calgary and Toronto, which account for almost 40 percent of national sales activity.
The number of newly listed homes rose 0.8 percent in October from September, while the national sales-to-new listings ratio was 55.7 percent. A ratio between 40 and 60 percent is considered consistent with a balanced housing market.
CREA said there were 5.8 months of national inventory at the end of October 2014.
$1=$1.13 Canadian Reporting by Andrea Hopkins; Editing by Bernadette Baum; and Peter Galloway