The Canadian Real Estate Association has once again revised its housing market forecast for the remainder of the year, saying the interest rate reductions by the Bank of Canada have not led to the gradual improvement it initially predicted.
Canada’s housing market will remain in “more of a holding pattern” until next spring when a “sharper rebound” is expected, the Canadian Real Estate Association (CREA) said in its latest quarterly forecast.
“The result is a slight downward revision to sales this year and next, but with the potential for much stronger momentum beginning in the second quarter of 2025,” the agency said in its report. “Some 468,900 residential properties are forecast to trade hands via Canadian MLS Systems in 2024, a 5.2 percent increase from 2023.”
The latest forecast came the same day that CREA reported the average price for homes sold in September stood at $669,630, an increase of 2.1 percent from the same month in 2023.
The association is now predicting an annual increase of only 0.9 percent for 2024, bringing the total to $683,200, a decrease from its earlier estimate of a 2.5 percent year-over-year rise.
The volume of homes sold in September increased by 6.9 percent compared to the same month last year. In contrast, sales experienced a modest rise of only 1.9 percent when comparing September to August, following the Bank of Canada’s third consecutive interest rate reduction.
The national increase was led by the Greater Toronto Area, Hamilton-Burlington, Montreal, Quebec City, the Greater Vancouver Area, and Victoria.
“Sales gains are now three for three in the months following interest rate cuts, which is a trend even though the increases weren’t headline-grabbing,” CREA senior economist Shaun Cathcart said in the press release.
“That said, with the pace of rate cuts now expected to be much faster than previously thought, it’s possible some buyers may choose to hold off on a purchase for now. This could further boost the rebound expected in 2025 at the expense of the last few months of this year.”
The month of September saw a 4.9 percent rise in new listings compared to the previous month, as sellers listed properties in greater than normal quantities for the first few weeks of the month. Gains were broad-based, with Canada’s biggest markets topping the list, CREA said.
There were 185,427 properties listed for sale across the country at the end of last month, up 16.8 percent from the same month in 2023. Despite the increase, listings still remain below the historical average of roughly 200,000 for this time of the year.
The national sales-to-new listings ratio fell to 51.3 percent in September, down from 52.8 percent in August, due to sales growing at a rate lower than that of new listings. This measure could be reversed if all those listings result in higher sales in October, CREA noted.
The long-term average for the national sales-to-new listings ratio is 55 percent, but ratios between 45 percent and 65 percent are generally reflective of a balanced state in the housing market, the association said.
“The beginning of September saw a burst of new supply for buyers to choose from before things generally quiet down for the winter,” CREA chair James Mabey said. “While some buyers may choose to take advantage, others may be inclined to wait as the bulk of future rate cuts from the Bank of Canada are now expected to show up in a matter of months as opposed to years.”
