A late-July interest rate cut from the Bank of Canada meant there wasn’t much movement to report regarding Canadian home sales for that month, but this won’t be the case for much longer.
The latest data from the Canadian Real Estate Association (CREA) shows home sales activity edged back 0.7% in July compared to June. Following the Bank of Canada’s first interest rate cut in four years back on June 5, home sales had increased 3.7%, so why didn’t that momentum carry into July?
“After a decent size gain in June, you can think of (housing market activity) as taking a pause before probably heading higher again later in the year,” said CREA Senior Economist Shaun Cathcart during the Housing Market Report (available to watch below).
Here’s a quick look at more CREA data from July:
- The actual (not seasonally adjusted) national average sale price was almost unchanged (-0.2%) on a year-over-year basis in July.
- Actual (not seasonally adjusted) monthly activity came in 4.8% above July 2023.
- The number of newly listed properties ticked up 0.9% month-over-month.
Why is an active fall market a ‘slam dunk’?
“We’ve now seen two rate cuts in a row, and the expected pace of future policy easing has steepened considerably, with markets now anticipating rate cuts at every remaining Bank of Canada decision this year,” Cathcart said, doubling down on his assertion that home buyers would be active again by adding, “a forecast for a rekindling of Canadian housing market activity going into 2025 has just gone from a layup to a slam dunk.”
More rate cuts, a continuing upward trend in new listings and a more balanced market are key ingredients needed to spur activity.
“While it wasn’t apparent in the July housing data from across Canada, the stage is increasingly being set for the return of a more active housing market,” said James Mabey, Chair of CREA. “At this point, many markets have a healthier amount of choice for buyers than has been the case in recent years, but the days of the slower and more relaxed house hunting experience may be somewhat numbered.”
How are Canadian home prices trending?
CREA reports while prices were up slightly at the national level, they were held back by reduced activity in the largest and most expensive markets (British Columbia and Ontario). Regionally, prices are rising in most markets.
“When you look under the hood of those national numbers, home prices may only be up slightly at that national level still at this point, but those are really being held back by … the Lower Mainland of B.C., the Greater Toronto Area (GTA) and some of the wider Greater Golden Horseshoe, but when you look out across Canada, prices are growing in a lot of markets all of a sudden,” Cathcart said.
The National Composite MLS® Home Price Index (HPI)—an exclusive tool REALTORS® have access to that gives them the most accurate and advanced home price levels and trends—edged up slightly by 0.2% from June to July.
The non-seasonally adjusted National Composite MLS® HPI stood 3.9% below where it was the same time last year. This mostly reflects how prices took off last April, May, June, and July, which didn’t happen this year.
The actual (not seasonally adjusted) national average home price was $667,317 in July 2024, almost unchanged (-0.2%) from July 2023.
As always, what’s happening in your market, may not be the same story as your neighbouring city. If you’ve noticed a lull in home sales in your area, that could be changing soon.
The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.
