May sees a slowdown in homebuying activity
Home prices and sales activity dipped marginally across Canada in May, although market watchers will eagerly follow June data to see how prospective homebuyers react to the Bank of Canada’s interest rate cut at the beginning of this month.
New data released by the Canadian Real Estate Association (CREA) showed the benchmark price of a home was down 0.2% on a month-over-month basis in May, dropping to $714,300, with sales inching downwards by 0.6% from the month prior.
The number of newly listed properties on the market, meanwhile, was up by 0.5% in May in a slight boost for homebuyers who’ve seen options constrained by a lack of supply in recent times.
That performance marked a “sleepy” month for the national housing market, according to CREA’s senior economist Shaun Cathcart, who added that May could mark the last subdued month for sales and prices after the Bank’s recent decision to cut.
“The spring housing market usually starts before all the snow has melted, somewhere around the beginning of April, but this year I believe a lot of people were waiting for the Bank of Canada to wave the green flag,” said @MabeyAHome, CREA Chair 👉 https://t.co/ABP2i2Kfbk… pic.twitter.com/H7sT6WDABb
— CREA | ACI (@CREA_ACI) June 17, 2024
“The psychological effect [of lower rates] for many who have been sitting on the sidelines was no doubt huge,” he said in a statement accompanying the data release. “The question now turns to further rate cuts – specifically, how fast and how far?”
The Bank slashed its benchmark interest rate by 25 basis points on June 5, with top economists suggesting a further cut could be on the way in July – and that rates could tumble by as much as a whole basis point by the end of this year.
Canada’s housing market roared into life during the COVID-19 pandemic, with prices skyrocketing and activity surging, but the onset of central bank rate hikes in early 2022 helped slow that momentum and bring about a protracted homebuying cooldown.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
