Canadian housing market shows limited growth, as buyers wait for improved affordability amid rate cuts
National home sales saw an increase in June after the Bank of Canada’s first interest rate cut since 2020.
Activity also posted a small gain in August following a second rate cut in late July. However, the broader picture suggests the housing market remains largely in a holding pattern.
Shaun Cathcart, CREA’s senior economist, explained, “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.”
In August 2024, home sales recorded through Canadian MLS Systems rose by 1.3 percent month-over-month, marking the highest level since January and the second highest in over a year. Even so, actual activity was 2.1 percent below August 2023 levels.
The number of newly listed properties increased slightly by 1.1 percent over the same period. Meanwhile, the MLS Home Price Index (HPI) remained unchanged on a month-over-month basis but registered a 3.9 percent decline year-over-year.
Additionally, the national average sale price was nearly unchanged, showing a 0.1 percent increase from August 2023.
At the end of August 2024, there were approximately 177,450 properties listed for sale across all Canadian MLS Systems.
This represents an 18.8 percent increase compared to a year ago, though it remains more than 10 percent below the historical average of 200,000 listings typically seen at this time of year.
New listings posted a 1.1 percent increase in August. The national increase was driven primarily by a surge in new supply in Calgary, which also experienced a significant boost in July. Edmonton followed with an increase in new listings, offsetting a decline in the Greater Toronto Area.
Sales rose slightly more than new listings in August, pushing the national sales-to-new listings ratio to 53 percent, up from 52.9 percent in July.
This ratio has remained stable since April. The long-term average for the national sales-to-new listings ratio stands at 55 percent, with a ratio between 45 and 65 percent typically indicating balanced market conditions.
James Mabey, chair of CREA, commented on the outlook for the housing market, stating, “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.”
Mabey noted that key periods of the year, such as the first weeks of April, May, June, and September, often see an influx of new listings. He explained that September’s first week brought not only a third interest rate cut but also a wave of new properties entering the market.
Mabey added, “If you're looking to buy or sell a property this fall, the first step is to contact a REALTOR® in your area today.”
At the end of August, national housing inventory stood at 4.1 months, slightly down from 4.2 months in July. This inventory level has remained within the range of 3.8 to 4.2 months since last October. The long-term average is about five months of inventory.
The National Composite MLS Home Price Index (HPI) remained unchanged from July to August, following small increases in June and July. Despite these fluctuations, prices at the national level have been relatively flat since the beginning of the year.
Year-over-year, the National Composite MLS HPI was down 3.9 percent, which mainly reflects the price gains seen last spring and summer, followed by declines in the latter half of the year. Looking forward, year-over-year comparisons are likely to improve from this point onward.
In August 2024, the actual national average home price was $649,100, almost unchanged from the same period in 2023, registering only a 0.1 percent increase.
