Sales of existing homes in both Toronto and Vancouver, the country's two most precarious housing markets, hit their highest level for the month of July since 2009 last month.

Greater Vancouver saw a 40.4 per cent year-over-year increase in sales over the Multiple Listing Service, while the Greater Toronto Area saw a 16-per-cent increase.

While the numbers are being compared to last summer's weakening market, the data suggests that the real estate market is picking up steam.

Story continues below advertisement

Finance Minister Jim Flaherty announced on June 21, 2012 that he would be tightening the country's mortgage insurance rules effective July 9, 2012, a move that contributed to a steep drop in sales that persisted right through to this year.

While the decline that was taking place around this time last year makes the year-over-year comparisons higher, Vancouver's sales last month were 11.5 per cent higher than June's level, and 0.1 per cent above the average July sales level over the past decade.

The Toronto Real Estate Board, meanwhile, noted that last month was the third highest July on record for the city, and pointed to an eight per cent year-over-year increase in the average selling price, to $513,246, as evidence that market conditions are tightening (though averages can be skewed by the types of homes that are selling).

There were 8,544 home sales over the Multiple Listing Service in the Toronto area last month, compared to 9,061 sales in June, which is typically part of the peak spring buying season.

The Toronto board, which represents the city's realtors, says that one year after Mr. Flaherty's rule changes many of the potential buyers who put their decision on hold are now back in the market.

One of the rule changes cut the maximum length of an insured mortgage to 25 years, from 30, a shift that realtors say knocked many first-time buyers out of the market.

"Demand has strengthened in our market in the last few months, which can, in part, be attributed to pent-up demand from the slowdown in sales activity we saw at the end of last year," Sandra Wyant, president of the Real Estate Board of Greater Vancouver, stated in a press release.

Story continues below advertisement

The MLS Home Price Index composite benchmark price for properties in the Vancouver area stands at $601,900. That's down 2.3 per cent from last July, but up 2.3 per cent over the last six months. (The Home Price Index seeks to account for shifts in the types of homes that are selling –for instance, large homes in pricey neighbourhoods versus small condos – to give a better gage of underlying prices than the average selling price.)

Calgary's 17 per cent year-over-year sales gain in July compares to a 6-per-cent year-over-year sales gain in June, and a 7-per-cent gain in May.

Economists generally expected Calgary's housing market to show more momentum this year than most parts of the country, but the Calgary Real Estate Board said much of July's activity was likely related to the flooding that happened in late June, with displaced renters pushed into the market and potential buyers wanting to snap something up in fear of dwindling supply.

While the data suggests that the market for existing homes is recovering, some economists have been cautioning that the downturn appears to be stronger now in the market for newly-built homes, especially condos.