Existing home sales across Canada climbed to the highest level of any third quarter on record, according to figures released today by the Canadian Real Estate Association.

Year over year increases in Toronto at 28 per cent and Vancouver at 124 per cent were the main reasons for the upswing.

The group reported 135,182 sales from July to September, up 18 per cent from the same time in 2008, and representing the largest such increase since 2002.

"Low interest rates, rebounding consumer confidence and an improving overall sense of economic security continue to draw homebuyers to the housing market," said CREA president Dale Ripplinger.

Vancouver, Toronto and Calgary were the three most active markets.

The national average price also rose by 11 per cent to $327,736 from the same quarter last year.

An increase in sales activity and fewer new listings are drawing down inventories.

However, on a seasonally adjusted basis the supply of homes edged up slightly in the third quarter after four consecutive quarterly declines.

"While the small rise in seasonally adjusted new listings suggests that the number of homes coming onto the market may soon begin to edge higher, the number of new listings remains well down from year ago levels," said the board.

The strong third quarter was capped by strong resale activity in September, up by 17 per cent, and a new record for the month.

This is the fourth consecutive increase from year-ago levels.

"Headline average price increases over the rest of the year are expected to prompt sellers to return to the market after having retreated to the sidelines late last year and earlier this year," said CREA chief economist Gregory Klump.

"An increase in new listings will help keep a lid on price increases."