Canadian Housing Market Faces New Hurdles in July: CREA

Despite signs of renewed momentum in June after the Bank of Canada’s first interest rate cut since 2020, activity in the Canadian housing market paused in July.

“With another rate cut announced on July 24, we’ve now seen two rate cuts in a row, and the expected pace of future policy easing has steepened considerably, with markets now anticipating rate cuts at every remaining Bank of Canada decision this year,” said Shaun Cathcart, CREA’s senior economist. “Combine that with a record amount of demand waiting in the wings, and the forecast for a rekindling of Canadian housing activity going into 2025 has just gone from a layup to a slam dunk.”

In July 2024, home sales activity recorded over Canadian MLS Systems edged back by 0.7 per cent on a month-over-month basis, which gave back a small portion of the post-first rate cut gain in June.

CREA noted that while monthly changes in sales activity were small amongst the larger centres in July, declines in Calgary and the Greater Toronto Area (GTA) were mostly offset by gains in Edmonton and Hamilton-Burlington.

There were roughly 183,450 properties listed for sale on all Canadian MLS Systems at of the end of July, which was up 22.7 per cent from a year earlier but still roughly 10 per cent below historical averages of over 200,000 for this time of the year.

New listings showcased a 0.9 per cent month-over-month increase in July and the national increase was led by a boost in new supply in Calgary. The national sales-to-new listings ratio also eased to 52.7 per cent in comparison to 53.5 per cent in June.

The long-term average for the national sales-to-new listings ratio is 55 per cent with a sales-to- new listings ratio between 45 per cent and 65 per cent, which CREA noted was consistent with balanced housing market conditions.

“While it wasn’t apparent in the July housing data from across Canada, the stage is increasingly being set for the return of a more active housing market,” said James Mabey, chair of CREA. “At this point, many markets have a healthier amount of choice for buyers than has been the case in recent years, but the days of the slower and more relaxed house hunting experience may be somewhat numbered. If you’re hoping to get into the market ahead of the pack, contact a REALTOR® in your area today.”

At the end of July, there were 4.2 months of inventory on a national basis, which remained unchanged from the end of June.

The National Composite MLS Home Price Index (HPI) edged up 0.2 per cent from June to July. Despite only being a slight increase, it was a bit larger than the increase in June, making it just the second and largest gain in the last year.

Prices were up slightly at the national level and were held back by reduced activity in the largest and most expensive markets in British Columbia and Ontario. Regionally, prices are rising in a growing number of markets, according to CREA.

The non-seasonally adjusted National Composite MLS HPI was 3.9 per cent below July 2023, which reflects how prices took off last April, May, June, and July. CREA noted that it’s mostly likely that year-over-year comparisons will improve from this point on.