Canadian Housing Activity Remains in Holding Pattern: CREA

After the Bank of Canada’s first interest rate cut since 2020, national home sales increased in June and activity posted another small gain in August closely after the second rate cut in late July.

Home sales recorded over Canadian MLS Systems increased by 1.3 per cent on a month-over-month basis in August 2024, and reached their highest level since January and their second highest in over a year.

 

“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. “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.”

CREA noted that actual monthly activity came in 2.1 per cent below August 2023, and that the number of newly listed properties increased 1.1 per cent month-over-month.

The MLS Home Price Index (HPI) was unchanged month-over-month but was down 3.9 per cent year-over-year. The actual national average sale price was almost unchanged on a year-over-year basis in August.

At the end of August 2024, there were roughly 177,450 properties listed for sale on all Canadian MLS Systems, up 18.8 per cent from a year earlier but still over 10 per cent below historical averages of around 200,000 listings for this time of the year.

New listings posted a 1.1 per cent month-over-month increase in August. For the second month in a row, the national increase was led by a boost in new supply in Calgary. New listings were also up in Edmonton, offsetting a decline in the Greater Toronto Area (GTA).

The national sales-to-new listings ratio moved up to 53 per cent, almost unchanged from 52.9 per cent in July. 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 generally consistent with balanced housing market conditions.

“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.”

At the end of August 2024, there were 4.1 months of inventory on a national basis, down from 4.2 months at the end of July.

The National Composite MLS HPI was unchanged from July to August, following two small increases in June and July.

The non-seasonally adjusted National Composite MLS HPI stood 3.9 per cent below August 2023. CREA noted that this mostly reflects price gains last spring and summer that were followed by declines in the second half of last year. As a result, it’s mostly likely that year-over-year comparisons will improve from this point forward.

The actual national average home price was $649,100 in August 2024, almost unchanged from August 2023.