The rekindling of Canadian housing market activity is still on pause, says the Canadian Real Estate Association (CREA) following the release of its latest national housing data.
In fact, home sales, new listings, prices, and market conditions are about as “flat as a pancake,” according to Shaun Cathcart, CREA’s Senior Economist.
“(The latest data) is not enough to qualify as the start of the show just yet,” Cathcart said in CREA’s monthly Housing Market Report. “The bigger picture is a market still stuck in the same holding pattern it’s been in since the beginning of the year.”
And why is that? With interest rates continuing to decline and the Bank of Canada signaling there will be more cuts to come in 2025, Canadians have been biding their time when it comes to buying properties. A recent report from RE/MAX shows 16% of Canadians said they would feel more comfortable entering the real estate market if they see the Bank of Canada’s key interest rate drop 1% (100 basis points—the last three interest rate cuts have all been 25 basis points each) by the end of the year.
According to Cathcart, that’s not exactly too far-fetched of a thought.
“With ever more friendly interest rates now all but guaranteed later this year and into 2025, it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country,” Cathcart was quoted as saying in CREA’s latest media release.
August home sales and what’s to come
While the housing market is described as flat, there were slight movements. Canadian home sales edged up 1.3% in August compared to July, reaching their highest level since January, and the number of newly listed properties increased by 1.1%.
With sales rising by only slightly more than new listings in August, the national sales-to-new listings ratio moved up to 53%, which has barely moved since April. The long-term average for the national sales-to-new listings ratio is 55%. A sales-to-new listings ratio between 45% and 65% is generally consistent with balanced housing market conditions.
“Declining interest rates are about to press the play button on this market any time now,” Cathcart said in CREA’s Housing Market Report. “Like I said last month, while the exact timing is a bit in question, though not too much, the overall forecast for the return of a vibrant housing market in the next year is a lock. A sure thing. A slam dunk.”
Cathcart said there are already signs the tide could be turning into a more active market. On Wednesday, Sept. 4, the Bank of Canada announced its third interest rate cut in a row, bringing down its overnight lending rate to 4.25%. Coincidentally, he said in the CREA Housing Market Report there are typically four periods each year that tend to draw people off the sidelines: the first few weeks of April, May, June, and September.
“We’ll see if we get a fall market response to that in the September data we publish next month,” Cathcart mentioned.
Home prices staying put
The National Composite MLS® Home Price Index (HPI)— an exclusive tool REALTORS® use to gauge a neighbourhood’s home price levels and trends most accurately—was unchanged from July to August, following two small increases in June and July.
That said, the bigger picture is how prices at the national level have been basically flat since the beginning of 2024 and when doing current year-over-year comparisons. The actual (not seasonally adjusted) national average home price was $649,100 in August 2024, almost unchanged (up by just 0.1%) from August 2023.
If prices remain mostly flat, interest rates continue coming down, listings continue ramping up, it’s not out of the question to think there will be a sweet spot for aspiring home buyers in the near future.
James Mabey, CREA’s Chair and a REALTOR® in Alberta, said it best: “We’ll have to wait to see how they respond, but if you’re looking to buy or sell a property this fall, the first step is to contact a REALTOR® in your area today.”
The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.
