Still, it could be only a matter of time before sales ramp up
Canada’s housing market is still stuck in a “holding pattern” despite a slight monthly home sales increase in August, according to the Canadian Real Estate Association (CREA).
Last month saw homebuying activity accelerate by 1.3% compared with July as interest rate cuts by the Bank of Canada helped spur the busiest market since the beginning of the year.
Still, those summer rate cuts – one in June, and another in July – have so far failed to light a fire under the overall market, according to CREA senior economist Shaun Cathcart.
Compared with the same time last year, actual monthly activity was down 2.1% while the MLS Home Price Index remained stagnant on a month-over-month basis and dropped by 3.9% from August 2023.
Cathcart said “fledgling signs of life” had appeared in the market, although homebuying activity has yet to ramp up notably. “With ever more friendly interest rates now all but guaranteed later this year and into 2025,” he added, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are well behaved in most of the country.”
Nationally, there was 4.1 months of inventory at the end of August 2024—down from 4.2 months at the end of July 👉 https://t.co/ABP2i2Kfbk #CREAstats pic.twitter.com/caRZod2L8z
— CREA | ACI (@CREA_ACI) September 16, 2024
New listings saw a slight increase in August, increasing by 1.1% from July. A total of about 177,450 properties were on the market at the end of the month, well below historical averages but significantly higher (18.8%) than the same time in 2023.
CREA’s chair James Mabey said the “stage was set” for demand to continue heating up across the Canadian housing market, even if that had yet to materialize.
The Bank’s decision to cut rates for a third consecutive time at the beginning of September could prove an important one for the housing market, he suggested. “There are typically four times in any given year that see a burst of new supply that can excite the market and draw buyers off the sidelines, and those are the first weeks of April, May, June, and September,” he said.
“So, the first week of September saw not only a third rate cut, but also a lot of new properties for buyers to consider. We’ll have to wait to see how they respond.”
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