The sudden turnaround in sales activity during the latter part of the year will likely cause a supply shortage in Canada next year, according to the Canadian Real Estate Association (CREA).
National sales trends improved at a faster-than-expected pace over the second half of 2019 as new listings continued to deplete.
"These trends have caused many housing markets to tighten, which has sharply lowered the national number of months of inventory," CREA said.
The balance between supply and demand hit its lowest since mid-2007 in November, resulting in increased competition among buyers. This provided a "fertile ground" for price gains, according to CREA.
The combined number of months of inventory in Canada, excluding the Prairies, and Newfoundland and Labrador, currently sits at a 15-year low and continues to fall.
"The number of homes available for sale in these provinces, which represent over 80% of national activity, is at a 15-year low. This is anticipated to support solid home price growth in 2020, particularly if current trends intensify," CREA said.
Given the limited supply, the national average sales price is expected to rise by 6.2% next year, led by projected gains in Ontario, Quebec, and the Maritimes.
On the other hand, prices in Alberta, Saskatchewan, and Newfoundland and Labrador are expected to decline slightly.
"In regions with supply shortages, price gains may exceed forecast levels should shortages become more acute than anticipated," CREA said.