Greater Toronto area home sales fell in March for a second straight month, while prices increased, keeping a housing market recovery in check at a time of historically high borrowing costs, data showed on Wednesday.

Seasonally adjusted sales declined 1.1% in March from the previous month after falling 11.5% in February, according to Toronto Regional Real Estate Board (TRREB) data. Average home prices increased 0.7% last month to C$1.09 million ($803,420), the highest since December, while new listings were down 3%.

Home sales rose strongly in December and January, pointing to a revival in the market in anticipation of interest rate cuts by the Bank of Canada.

On a year-over-year basis, sales were down 4.5% last month, which TRREB said was due in part to Good Friday falling in March this year versus April in 2023. Still, sales notched an annual increase of 11.2% in the first quarter and new listings were up at a greater rate, rising 18.3%.

"We have seen a gradual improvement in market conditions over the past quarter," TRREB President Jennifer Pearce said in a statement. "More buyers have adjusted to the higher interest rate environment."

Investors are betting that the Bank of Canada will leave its benchmark interest rate on hold at a 22-year high of 5% next week but then begin a rate cutting campaign in June or July.

 

"Homeowners may be anticipating an improvement in market conditions in the spring, which helps explain the marked increase in new listings so far this year," Pearce said.

 

($1 = 1.3567 Canadian dollars) (Reporting by Fergal Smith; Editing by David Gregorio)