(Ottawa) The Canadian Real Estate Association (CREA) says the number of homes sold in August was down 2.1 per cent from a year ago as the market remained quiet despite lower interest rates.
On a seasonally adjusted monthly basis, national home sales rose 1.3% from July, the agency said Monday.
With interest rate cuts forecast for the remainder of the year and into 2025, “it makes sense that potential buyers will continue to wait for improved affordability, especially as prices remain relatively stable in most parts of the country,” CREA senior economist Shaun Cathcart said in a statement.
Association president James Mabey said the first week of April, May, June and September typically sees a burst of new offerings that can shake up the market.
This year, the Bank of Canada has also announced three consecutive rate cuts, the last of which was in the first week of September. Mabey said that could help attract buyers.
The latest quarter-percentage-point cut brought the policy rate down to 4.25%. Economic forecasts indicate that the central bank will likely continue to cut its policy rate in quarter-percentage-point increments through July 2025, bringing it down to around 2.5% by then.
“Housing remains the main driver of inflation. The [Banque du Canada] “We will be watching closely to see if the three recent interest rate cuts translate into a significant increase in home prices, but so far prices have performed well,” Desjardins economist Kari Norman said in a note.
“We remain sure that the [Banque du Canada] will cut its key interest rate again in October. This should be followed by another [baisse] in December and six more in 2025.”
The average sale price for August was $649,100, up 0.1% from the same month last year.
Possible recovery
There are encouraging signs of a recovery, said Mike Heddle, a Royal LePage real estate broker in Hamilton, Ont.
Mr. Heddle said residential visits have increased in the province over the past two weeks after a slowdown in August.
“Before the property is sold, we have to generate offers. Before we generate offers, we have to generate visits,” he said.
“If there is one important indicator in the market, this could be it.”
The number of newly listed homes rose 1.1 per cent in August from July, led by an increase in supply in Calgary. New listings were also up in Edmonton. Ultimately, increased supply in Alberta offset a decline in the Greater Toronto Area, according to CREA’s report.
At the end of August, approximately 177,450 properties were for sale, 18.8% more than a year earlier but more than 10% below historical averages for this time of year.
According to Rishi Sondhi, an economist at TD Bank, the “thaw in the housing market will eventually come.”
“Potential buyers may be waiting for rates to drop further before jumping in, especially with the Bank of Canada’s relatively transparent message that further rate cuts are on the way,” Sondhi said in a note.
“We currently expect strong growth in Canadian home sales over the next few quarters starting in the fourth quarter, although price growth will likely be limited by a challenging affordability environment and weak supply and demand conditions in British Columbia and Ontario.”
According to Mr Heddle, the current market balance is in favour of potential buyers.
“I think it’s a great time to buy if you’re in the market, you can afford it and it’s the right house, because you can negotiate,” he said.