OTTAWA — The Canadian Real Estate Association has revised upward its forecast for national home resales in 2011, citing stronger than expected activity and prices in the second quarter.

CREA previously had forecast a one per cent dip in sales this year compared with 2010.

However, CREA said Tuesday that the strong second-quarter performance and momentum going into the third quarter means the resale market should finish this year slightly ahead of last year.

Overall, 450,800 housing units are expected to be sold across Canada under its multiple listing service in 2011, up less than one per cent from 2010, and the average selling price will be slightly higher. About 90 per cent of resales in Canada are listed on MLS.

On a regional basis, British Columbia's 2011 sales forecast has been revised slightly higher, while stronger than expected activity in Ontario is expected to offset slightly softer than anticipated demand in Quebec, Manitoba and Newfoundland.

Meanwhile, the association says erosion in affordability due to higher prices has prompted it to make a slight, seven-tenths of a per cent downward revision in its sales outlook for 2012 to 447,000 units. That would be roughly on par with the 10-year average, CREA said.

"While there had been some talk of potential interest rate increases. That hasn't happened," said CREA president Gary Morse.

"In fact, rates have actually come down and are now expected to remain low for the remainder of this year and into 2012. It's a great opportunity to purchase a property with financing at very favourable rates."

The national average home price is forecast to rise 7.2 per cent in 2011 to $363,500. This is an increase from the previous forecast, reflecting continued strong price growth in Vancouver in the second quarter of 2011 and acceleration in prices elsewhere, particularly Toronto.

"These two markets exert an outsized influence on the national average due to their relatively high level of activity and average price," CREA said.

The national average home price is expected to moderate in the second half of 2011, returning to normal following a heavily skewed start to the year due to a surge in multimillion-dollar sales in selected areas of Greater Vancouver and a higher than normal share of overall sales in more expensive markets.

"Some of the expected moderation in the national average price is seasonal, with average price peaking in many local markets during the second quarter of any year," said Gregory Klump, CREA's chief economist.

"Elevated shares of provincial and national sales activity in Vancouver and Toronto are also expected to return to more normal levels, contributing to an anticipated moderation in average price in British Columbia, Ontario, and nationally," Klump said.

He said additional new listings should result in a more balanced resale housing market in most provinces, with the national average price forecast to stabilize in 2012 "although at a slightly higher level than previously expected."

Meanwhile, CREA said national resale housing activity was stable on a month-to-month basis in July following an uptick in June.

However, actual, or non-seasonally adjusted, sales activity in July came in 12.3 per cent above national levels in July 2010 when levels for the month reached their lowest point since 2002.

With year-to-date sales continuing to run in line with the 10-year average, the national housing market remains firmly entrenched in balanced territory.

The national average price in July posted the largest year-over-year gain since April 2010, but was below where it stood in June.

"Upward skewing of the national average price is diminishing due to fewer expensive sales and a declining share of national activity in Vancouver and Toronto," it said.

Major markets that saw gains compared to June include Edmonton, Montreal, as well as Newfoundland and Labrador. Activity also held steady in Toronto, while Vancouver recorded a small decline.

Based on a sales-to-new listings ratio of between 40 to 60 per cent, about three in every five local markets in Canada were balanced in July. Half of the remaining markets may be classified as sellers' markets, with a sales-to-new listings ratio of above 60, CREA said.