Canadian Home Sales Edge Up Again Following Third Interest Rate Cut
The Canadian Real Estate Association’s (CREA) October 15, 2024, Monthly Housing Market Report presents an interesting snapshot of a market responding to recent economic shifts, particularly the Bank of Canada’s series of interest rate cuts. With the most recent of these rate reductions in September, Canadian home sales continued to rise, gaining 1.9% month-over-month, marking the third consecutive increase following rate cuts. Although these gains may not be dramatic, they point to a consistent pattern in recent months that could indicate a stable upward trend, albeit slower than some may expect. This trend reflects the potential for an active housing market next year, as many buyers may hold off for anticipated further cuts in early 2025.
Market Dynamics and Regional Highlights
Regionally, the Greater Toronto Area and Hamilton-Burlington, Montreal, Quebec City, and the West Coast (Vancouver and Victoria) were leaders in sales growth. This regional distribution underlines the diversity in Canada’s housing market, where economic resilience, demand, and inventory availability vary. For example, while Ontario cities lead the charge, regions like Quebec City also see momentum, reflecting local factors that draw buyers despite broader economic trends.
Inventory and Supply
New listings saw a significant 4.9% increase month-over-month in September, leading to the availability of 185,427 active listings, a year-over-year jump of 16.8% yet still below Canada’s historic average of 200,000 listings. This increase in inventory could signal a balanced market, especially with a sales-to-new-listings ratio easing to 51.3%, close to the balanced range of 45-65%. Buyers may find more choices than in previous months, as sellers are motivated to list before the traditionally slower winter months.
Prices: Steady but Uneven
Price stability is a central theme in CREA’s report, with the MLS® Home Price Index (HPI) ticking up just 0.1% from August to September, though it remains 3.3% below levels from the previous year. The report notes a minor year-over-year gain in the national average sale price, up 2.1%. Nationally, housing prices have shown a flat trajectory through 2024 despite minor month-to-month adjustments, indicating that sellers are likely holding steady in their price expectations in response to demand from rate-driven buyers. This relatively flat pricing may appeal to prospective buyers aiming to enter the market before any dramatic economic shifts.
Outlook and Considerations for Buyers and Sellers
The fall and winter months could bring interesting dynamics to the market, especially with possible further rate cuts on the horizon. CREA notes that these reductions could positively impact the 2025 market, as buyers who may delay their purchase now could drive demand early next year. As James Mabey, CREA’s Chair, emphasizes, fall is an ideal time for buyers to engage with a REALTOR® and strategize, given the diverse economic signals at play and the increase in inventory.
This CREA report provides a positive outlook for the Canadian real estate market, with favorable conditions for both buyers and sellers. The increased supply and manageable prices create an environment for potential long-term growth.
