By: Garry Marr, Financial Post June 15, 2009

TORONTO — The housing market continued to rebound in May with a fourth consecutive increase in monthly sales, according to the Canadian Real Estate Association.

The Ottawa-based group, which represents about 100 boards across the country, also said the average sale price of a home sold through the multiple listing service reached a new record of $319,757. That was up 0.4 per cent from May 2008, when the previous record was set.

CREA says the market is now returning to what it called "pre-recession levels" of activity. Nationally, prices are now up 16.4 per cent from the January low.

"Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January," said Dale Ripplinger, the Regina-based president of the association. "Strengthening consumer confidence, low interest rates, and improved affordability are drawing buyers to the housing market across Canada."

CREA said transaction activity in the country's most expensive markets is leading to an overall rebound, which is helping to skew the average price upward. In the past, the reverse has happened.

There were 49,521 units sold last month, a 0.8 per cent decline from May 2008. CREA said sales per month have been increasing, on a seasonally adjusted basis, since January. Transactions were up eight per cent on this basis between April and May, and the association said sales were up 43 per cent last month from the January bottom.

Actual sales were up in 14 of the 25 major markets CREA surveys. Greater Vancouver sales jumped 16.4 per cent in May from a year earlier. Toronto sales were up 1.9 per cent, Montreal 8.2 per cent, Calgary 11.3 per cent and Edmonton 18.7 per cent.

The jump in sales activity comes as supply is declining. The pace of new home construction is down close to 50 per cent from last year while new listings in the existing-homes market are also sharply declining.

CREA said new listings are now at at their lowest level since December 2005. There were 49,438 actual new listings in the country's top markets, a 22.7 per cent decline from a year earlier. Greater Vancouver saw new listings decline by 35 per cent from a year ago while Toronto's new listings were off 26.9 per cent.

"Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses," said Gregory Klump, chief economist with CREA. "The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets."