Higher interest rates are set to take their toll
The Canadian Real Estate Association (CREA) has downgraded its home sales forecast for this year and 2024 as higher interest rates bite and would-be buyers step to the sidelines.
The association now expects 2023 home sales to be 6.8% lower than last year, with 464,239 properties set to change hands – a downward revision from its April expectation of 492,674 sales for the year.
Home sales for 2024 are anticipated to total 516,043, substantially down from CREA’s earlier forecast of 561,090, with rate hikes set to weigh against a recent resurgence in sales activity.
The national average home price is expected to fall by 0.2% over 2022 levels, coming in at $702,409 this year but shooting back upwards to $723,243 in 2024 – with both of those forecasts higher than CREA’s April estimates.
Unsurprisingly, lack of housing supply and a scarcity of new listings are two of the main factors exerting significant upward pressure on home prices, CREA said.
The association expects interest rates – which saw a further jump this week with the Bank of Canada’s latest hike – will help cool sales activity further.
“Looking further out, there’s… a growing consensus that rates will not just be higher, but likely for longer – well into 2024,” CREA said in remarks accompanying its announcement.
Nationally, there were 3.1 months of inventory at the end of June 2023— unchanged from the end of May and down more than a full month from the most recent peak at the end of January 👉 https://t.co/SYU9ZldT4h #CREAStats pic.twitter.com/WMtX2rtEaZ
— CREA | ACI (@CREA_ACI) July 14, 2023
June sees home sales tick upwards across the country
National housing figures for June, also released today, showed that sales activity was up over May by 1.5% on a seasonally-adjusted basis.
The actual number of sales was 50,155, an increase of 4.7% from the same time last year, while the average home price surged by 6.7% to $709,218.
New listings also continued to plummet on a year-over-year basis, falling by 11.1% to 84,749, although they saw a sizeable seasonally-adjusted increase from the prior month, by 5.9% to 63,571.
