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Toronto’s home prices extended gains in November, and are now accelerating at the fastest annual pace since 2017 as demand continues to outpace a dwindling supply of listings.

Benchmark prices on homes sold in Canada’s biggest city rose 0.6 per cent in November from October, bringing the increase from a year earlier to 6.8 per cent, the Toronto Real Estate Board said in a report Wednesday. The number of transactions also rose, with sales up 14 per cent from November 2018.

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Toronto’s housing market has began bouncing back in recent months — driven by a combination of lower mortgage rates and rising population — after almost two years of adjustment to higher taxes and tighter regulations to tame soaring valuations.

While transactions still remain well below records in 2016, when the market was being driven by speculative demand, prices have fully recouped their declines and realtors are cautioning values could continue rising given the dearth of listings and supply. Active listings fell 27 per cent in November from a year earlier, according to TREB.