National home sales jumped in December but prices continued to drop, and economists said it was too early to conclude the housing market was on a rebound.

The 8.7 per cent bump in transactions from November to December was the first monthly increase since June, according to the Canadian Real Estate Association (CREA). Last month’s volume was similar to the spring when buyers briefly flooded the market on the belief that the Bank of Canada was done raising interest rates.

But CREA and bank economists cautioned against reading too much into last month’s sales growth. “Was the December bounce in home sales the start of the expected recovery in Canadian housing markets? Probably not just yet,” Shaun Cathcart, CREA’s senior economist, said in a news release. He said the increased activity was likely because some sellers finally accepted that they would not get the prices they saw in early 2023.

Toronto-Dominion Bank also made similar predictions. “We’d be cautious in drawing too many implications from this report,” said TD economist Rishi Sondhi in a research note, adding that the mild December weather may have encouraged more sales. “We’d need a few more months of data to assess if this is really a turning of the tides for housing,” he said.

CREA said Canadians sold 443,511 homes in 2023, which was 11 per cent lower than 2022 and similar to the period following the 2007 U.S. housing crash and global recession. It was also similar to 2018, when Ottawa’s stricter mortgage rules came into effect for most borrowers.

The home price index, which excludes the priciest purchases, was $730,400 last month, a decline of 0.8 per cent from November and the fourth straight month of declines. Compared with December, 2022, the home price index was 0.8 per cent higher.

Fewer homeowners put their properties up for sale last month. New listings fell 5 per cent from November to December, the lowest level since June when the Bank of Canada shocked the housing market with another interest rate hike.

CREA predicted that over this year that the average home price would increase by 2.3 per cent with stronger gains in Alberta, Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador. The association said prices would remain flat in Ontario, the country’s largest real estate market, as well as in British Columbia.

The country’s central bank has not raised interest rates since July and the real estate industry is expecting the bank to start cutting rates this year. The U.S. Federal Reserve has already indicated that it will do so.

But economists said the Bank of Canada is likely worried that any talk of a rate cut will spur another real estate buying frenzy and stoke inflation again – which is what occurred last spring when the central bank said it would take a break from raising interest rates.