It’s the calm before the storm – two interest rate cuts are now complete but the housing market remains stubbornly poised for growth as buyers and owners wait to see the impact.
Home sales fell 0.7% in July, compared with the June numbers, according to the Canadian Real Estate Association (CREA).
June had recorded a year-on-year increase of 3.7% in transactions, and many expected the market to respond even more positively during the summer selling season.
Perhaps it’s unfair to expect an immediate market response to the two rate cuts, especially with concerns rising about unemployment, which stands at 6.4%.
The recent market performance is a reminder for owners of the difficulty in predicting the mood of the property market.
The recently-released MLS Home Price Index increased 0.2%, a number dampened by disappointing results in two of our most expensive markets, BC and Ontario. The average price of $667,317 for a home in Canada has barely changed for 14 months.
On the brighter side, the rising trend for new listings has continued.
CREA says there were 183,450 active listings in July, which is 22.7% higher than a year ago. However, historically, Canada has approximately 200,000 properties for sale at any one time.
CREA noted the market continued to be balanced, citing the sales-to-new-listings ratio was 52.7%, which is well within the 45%-65% bracket for normal market behaviours.
In a statement, CREA said: “While there were early signs of renewed momentum in June following the Bank of Canada’s first interest rate cut since 2020, activity in Canada’s housing market took a pause in July.”