The Canadian Real Estate Association has adjusted its housing market forecast for the rest of the year due to higher levels of supply and a slow spring season caused by fewer expected interest rate cuts in 2024.
On July 12, the association stated that it predicts a gradual recovery in the national housing market, with 472,395 properties expected to be sold this year, reflecting a 6.1 percent increase from 2023. This is a decrease from their previous forecast of a 10.5 percent gain in April.
The revised forecast coincided with CREA’s release of the latest national home sales and pricing data for June.
In comparison to the previous year, home sales in June decreased by 9.4 percent, attributed to higher activity in spring 2023. However, sales saw a 3.7 percent increase on a month-over-month basis.
Shaun Cathcart, senior economist at CREA, noted, “It wasn’t a blockbuster month, but Canada’s housing figures did show some improvement in June following the first Bank of Canada rate cut.”
The average selling price of a home in June was $696,179, down 1.6 percent from June 2023. Nationally, prices increased by 0.1 percent compared to May, marking the first month-over-month gain in nearly a year.
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TD economist Rishi Sondhi commented, “We expect markets to strengthen in the latter part of the year as the economy remains stable and more significant interest rate reductions are implemented. However, challenges with affordability may restrict the extent of improvement.”
CREA now predicts a 2.5 percent annual increase in the average home price for 2024, reaching $694,393, down from their previous forecast of a 4.9 percent increase.
The Bank of Canada initiated its rate reduction process with a cut on June 5, lowering its key interest rate to 4.75 percent from five percent.
At the end of June, there were approximately 180,000 properties listed for sale across Canada, a 26 percent increase from the previous year but still below the historical average of around 200,000 for this time of year.
New listings saw a 1.5 percent month-over-month rise in June, led by the Greater Toronto Area and the B.C. Lower Mainland.
