A summer start of rate cuts by the Bank of Canada failed to revive Canada’s housing market, with the national real estate association suggesting homebuyers are content to wait for cheaper financing costs before sitting on the sidelines.
The Canadian Real Estate Association (CREA) said Monday that home sales rose 1.3 per cent in August compared to July, the highest level since the start of the year.
But the activity level is still 2.1 percent below the same month last year. Sales remain subdued under the weight of the still elevated interest rates.
“Despite some emerging signs of life that will kick-start the long-awaited monetary policy easing cycle, Canadian housing market activity still appears stuck in the same pattern as it has been all year,” said Shaun Cathcart, CREA senior economist , in a statement Monday.
The Bank of Canada began its rate cutting cycle in June, followed by successive rate cuts in July and September. Many economists expect the easing cycle to continue through much of 2025.
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Despite the early rate cuts, there hasn’t been a surge in demand that has brought potential buyers back into the market.
Cathcart said it “makes sense” that households would continue to wait for lower interest rates and cheaper mortgages. Prices are “still good in most of the country,” he said, and he was in no rush for buyers to make a deal.
On a non-seasonally adjusted basis, CREA said the national median home sales price was $649,100 last month, just one-tenth of a percentage point higher than in August 2023.
CREA’s national house price index, which allows a more comparable comparison of property types, remained unchanged from July to August and has remained broadly flat throughout the year.
New listings across Canada rose 1.1 per cent month-over-month in August, just below the increase in sales. That increase was led by a “much-needed boost” in Calgary, CREA said, with rising listings in Edmonton also helping offset a decline in the Greater Toronto Area.
James Mabey, chairman of CREA, said in a statement on Monday that with more rate cuts in the forecast, “the stage is set for a faster return of demand, but we are clearly not there yet.”
Mabey noted that there is typically a seasonal jump in supply in the first week of September, which could coincide with the Bank of Canada’s third rate cut earlier this month. If that happens, “it could excite the market and draw buyers off the sidelines,” he suggested.
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