A recovery in Canadian home prices accelerated in April, as warming weather brought a surge of buyers back into the market to compete for a limited number of properties.

The benchmark price for a home in Canada rose to $723,900 (about US$536,000), up 1.6 per cent from March on a seasonally adjusted basis. Transactions surged 11.3 per cent from the month before, but new supply of homes is near a 20-year low, according to data from the Canadian Real Estate Association. 

After an abrupt rise in borrowing costs triggered a sharp correction in home prices last year, the Bank of Canada’s decision to pause rate hikes seems to be helping spark a turnaround. It means the cost of variable-rate mortgages is holding steady, while longer-term fixed mortgage rates have edged down recently due to a rally in government bonds. 

In addition, Canada’s population is swelling — more than a million newcomers arrived last year — bringing attention once again to a shortage of housing stock and prompting some buyers to make aggressive bids.

“With interest rates at a top, and home prices at a bottom, it wasn’t all that surprising to see buyers jumping off the sidelines and back into the market in April,” Shaun Cathcart, the real estate group’s senior economist, said in a release accompanying the data. “Supply, on the other hand, has been sluggish, hence the price gains from March to April seen all over the country.”

In the two most expensive markets, Toronto and Vancouver, some of the hallmarks of the 2021 real estate frenzy are showing up again — such as bidding wars, crowds at open houses and homes selling well above the asking price.

The upbeat tone in Canada’s housing market stands in contrast to some other countries that have experienced home-price corrections, such as Sweden, where forecasters expect prices to continue falling into the summer months. 

However, Canada’s benchmark price remains 12.3 per cent below its level a year ago.