CALGARY- There’s little mystery why Canada’s housing market has seen a rebound in sales this spring.

“Record-low mortgage rates have unleashed pent-up demand that accumulated last year when previously soaring prices closed the door on first-time buyers,” said Sal Guatieri, senior economist with BMO Capital Markets, in a research report released Friday.

“After a harsh winter, spring has come surprisingly early to Canada’s housing market. Sales have rebounded from a lengthy slumber and prices have firmed . . . While it’s doubtful that the housing train has left the station without a recovery on board, the data support our long-held view that the Canadian market is merely correcting not busting.”

In Calgary last month, historic low mortgage rates combined with less expensive homes compared with a year ago sparked activity in the local real estate market. May witnessed the first year-over-year gain in single-family MLS sales since September and since April 2007 for condos.

There were 1,584 single-family home sales last month, up 15.8 per cent from May 2008, while the condo market saw 653 sales, representing a 13.2 per cent hike from a year ago.

The average sale price for a single-family home in May was $436,427 while for a condo it was $275,212, compared with $426,311 for a single-family home and $277,491 for a condo in April.

However, the prices are off from year-ago levels when the average sale price was $479,564 for single-family homes and $311,816 for condos. Single-family prices are off by nine per cent while condo prices are down by nearly 12 per cent from last year.

At the national level, Guatieri said despite massive job losses, demand has firmed for housing even in Ontario and British Columbia and to a lesser extent in “boom-bust” Alberta.

“The surprising upturn in sales, coupled with fewer listings, has tilted the market back towards balance from the buyers’ haven of last year,” he said.

Guatieri said the housing market could cool this summer in the wake of further job losses and less pent-up demand.

“Further, because home prices remain high relative to incomes, affordability could become an issue again if prices or rates rise too fast,” he said. “For this reason, prices are expected to climb only moderately in the year ahead. Home builders also appear skeptical of the recent sales revival with starts sitting at 11-year lows and about one-quarter below levels consistent with demographic demand.”

He said housing markets should revive again when the recession ends later this year and expected higher energy prices should recharge Alberta’s market.

“Super-low mortgage rates and fading job insecurities have pulled nervous first-time buyers off the sidelines,” said Guatieri. “While Canada’s market may cool in the face of further job losses this summer, a better economy and historically low interest rates should provide a good foundation for growth in 2010.”