A summer start to interest rate cuts from the Bank of Canada failed to breathe new life into the Canadian housing market, with the national real estate association suggesting homebuyers are content to wait for cheaper borrowing costs before getting off the sidelines.
The Canadian Real Estate Association (CREA) said Monday that home sales were up 1.3 per cent in August from July, the highest level since the start of the year.
But activity levels are still 2.1 per cent below the same month last year. Sales remain muted under the weight of still-elevated interest rates.
“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,” said Shaun Cathcart, CREA senior economist, in a statement Monday.
The Bank of Canada kicked off its rate-cut cycle in June, following up with consecutive drops in July and September. Many economists expect the easing cycle will continue through much of 2025.
Despite the early rate cuts, there hasn’t been a flood of demand bringing prospective buyers back into the market.
Cathcart said it “makes sense” that households are continuing to wait for lower rates and cheaper mortgages. Prices are “still well behaved in most of the country,” he said, putting no rush on buyers to try to get a deal.
On a non-seasonally adjusted basis, CREA said the national average home sale price last month was $649,100, just a 10th of a percentage point higher than August 2023.
CREA’s national home price index, which provides a more like-for-like comparison of property types, was unchanged from July to August and has been essentially flat all year.
New listings across Canada were up 1.1 per cent month-to-month in August, falling just short of the rise in sales. That increase was led by a “much-needed boost” in Calgary, CREA said, with rising listings in Edmonton also helping to offset a decline in the Greater Toronto Area.
James Mabey, chair of CREA, said in a statement Monday that with more rate cuts in the forecast, “the stage is set for a faster return of demand, but we’re clearly not there just yet.”
Mabey noted there’s typically a seasonal jump in supply in the first week of September, which could coincide with the Bank of Canada’s third interest rate cut earlier this month. If that comes to pass, “that can excite the market and draw buyers off the sidelines,” he suggested.