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The number of existing homes that changed hands in Canada during October came in seven per cent higher than a year earlier, topping economists’ expectations and representing the country’s best October since 2009.

On a seasonally adjusted basis, sales were 0.7 per cent higher than they were in September, defying economists forecasts of a month-over-month decline and marking the sixth consecutive monthly rise, according to the Canadian Real Estate Association (CREA), which represents realtors.

“Sales are now running comfortably above the 10-year average and near the best levels of the past decade,” said Bank of Montreal senior economist Robert Kavcic in a research note.

While gains extended outside Toronto, Vancouver and Calgary, economists suggest Canada’s housing market is still a “three-city show.”

“The national picture masks widely divergent regional trends. In fact, any talk of housing market strength really comes down to a discussion about Vancouver, Calgary and Toronto,” Kavcic said.

“While price momentum in Calgary might finally be slowing, Vancouver and Toronto continue to strengthen.”

The average national price rose 7.1 per cent from last year to $419,699, the increase, once again, driven by gains in Calgary (9.5 per cent), Toronto (8.3 per cent) and Vancouver (6.1 per cent).

“Sales did not increase in many local markets in Canada, which shows that national and local housing market trends can be very different.”

But CREA’s chief economist, Gregory Klump, noted sales activity strengthened outside the major players, as well.

“Sales in a number of BC markets have started to recover from weaker demand over the past couple of years,” he said.

“They have also been improving across much of Alberta, where interprovincial migration and international immigration are reaching new heights.”

Still, CREA President Beth Crosbie said “sales did not increase in many local markets in Canada, which shows that national and local housing market trends can be very different.”

Indeed, new supply was down in over half of all local markets, and outsized gains in Greater Vancouver, Calgary, Edmonton, and Greater Toronto is what boosted the national rise of 0.8 per cent from September to October.

What can we expect in the future?

Toronto-Dominion Bank economist Diana Petramala said in a research note that the impact of the Canadian housing market’s “second wind,” following the 45 basis point decline in interest rates at the start of this year, is expected to fade in the coming months as interest rates rise and pent-up demand eases.

“Interest rate declines of this magnitude have historically boosted sales for up to six months and October was that mark. Furthermore, affordability is likely to deteriorate as home prices are still growing at a faster pace than incomes,” she said.

“We continue to believe a moderation in housing activity is in the cards for the Canadian economy, but it likely won’t happen until interest rates start edging higher at the end of next year.”

Follow Kat Sieniuc on Twitter: @katsieniuc

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