Following two cuts to the overnight lending rate in June and July by the Bank of Canada, home sales saw a slight boost in August across Canada, according to the latest report from the Canadian Real Estate Association (CREA). However, the housing market still feels stuck in a holding pattern, with only marginal changes across most metrics, according to experts.
“Despite some fledgling signs of life to kick off the long-awaited monetary policy easing cycle, Canadian housing market activity still looks to be stuck in the same holding pattern it’s been in all year,” said Shaun Cathcart, CREA’s Senior Economist, in the report. “That said, with ever more friendly interest rates now all but guaranteed later this year and into 2025, it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
Home sales up slightly
In August 2024, home sales across Canada’s MLS® systems edged up 1.3% compared to July. This marks the highest level of sales since January, and the second-highest monthly total in over a year. However, the overall picture shows a market that hasn’t fully heated up yet.
Inventory on the rise
There were 177,450 total properties for sale at the end of August, up 18.8% from last year, according to CREA. However, this is still 10% below the historical average of around 200,000 listings typically seen this time of year.
New listings also ticked up by 1.1% in August, thanks to a much-needed boost in Calgary’s housing supply. Edmonton followed with a rise in listings as well, offsetting a slight decline in the Greater Toronto Area (GTA).
With sales growing only a little more than new listings, the sales-to-new listings ratio moved up to 53% – just barely changed from July’s 52.9%.
The number of months of inventory was 4.1 months at the end of August, down slightly from July’s 4.2 months. This figure has been holding steady between 3.8 and 4.2 months for nearly a year, reinforcing the idea of a market in neutral gear.
“With more interest rate cuts now expected between now and next summer, the stage is set for a faster return of demand, but we’re clearly not there just yet,” said James Mabey, Chair of CREA. “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. So, the first week of September saw not only a third rate cut, but also a lot of new properties for buyers to consider.”
Home prices report little change
The National Composite MLS® Home Price Index (HPI) was flat from July to August, following small price increases in the previous two months. Home prices have stayed mostly unchanged since the beginning of 2024, according to CREA.
On a year-over-year basis, prices are down 3.9% compared to August 2023. This drop reflects price gains seen during the spring and summer of 2023, followed by declines later that year. Expect these year-over-year comparisons to improve as we move forward. The actual (not seasonally adjusted) average home price in Canada was $649,100 in August 2024, almost unchanged from the same month last year.
