(Ottawa) The Canadian Real Estate Association (CREA) says it is revising its housing market forecast downward for the remainder of 2024 due to increased supply and a quiet spring marked by fewer rate cuts than expected.
CREA says it anticipates a gradual rebound in the national housing market, with 472,395 properties expected to change hands this year, representing a 6.1% increase from 2023 — down from its April forecast of a 10.5% gain.
Compared with June 2024, the number of homes changing hands in June 2023 fell 9.4%, reflecting stronger activity in spring 2023, but CREA says sales increased 3.7% between May and June after the Bank of Canada’s first rate cut.
CREA senior economist Shaun Cathcart says it wasn’t a month of roaring sales, but the month-on-month figures show early signs of renewed life for the national housing market.
The average price of a home sold in June was $696,179, down 1.6 per cent from June 2023. The association says it now expects an annual increase of just 2.5 per cent for 2024, to $694,393. That’s down from its previous forecast of a 4.9 per cent increase.
“This could be a harbinger of an improvement in activity to come,” TD economist Rishi Sondhi said in a note. “Indeed, we expect markets to be stronger in the second half of the year as the economy holds up and more significant policy rate cuts are forthcoming. However, tight affordability conditions will likely limit the degree of improvement.”
The Bank of Canada lowered its key interest rate from 5% to 4.75% on June 5. Further cuts could follow.
“Overall, the resale home market was subdued across much of the country in June, with little major reaction to the initial rate cut,” BMO senior economist Robert Kavcic said in a note. “For the Bank of Canada, this will be seen as good news since the market is not opposed to further easing at this point.”
Potential additional rate cuts by the central bank later this year should put more potential buyers off the market, John Lusink, president of Right at Home Realty, said in an interview.
“I think that if they [les baisses] “If the rates are large enough, we could see a modest uptick in activity by mid- to late-fourth quarter,” Lusink said, adding that he would be surprised if there were not further rate cuts during the remainder of the year.
I wouldn’t tell any buyer to wait, but I would tell them to take their time, and there are plenty of deals out there right now.
John Lusink, President of Right at Home Realty
At the end of June, there were about 180,000 properties for sale across Canada, up 26% from a year earlier but still below historical averages of about 200,000 for this time of year.
New listings increased 1.5 per cent month-over-month in June, led by the Greater Toronto Area and British Columbia’s Lower Mainland.
“There are sellers on one side, buyers on the other, and the two don’t meet in the middle,” Lusink said.