Canada’s housing sales, as reported by the Canadian Real Estate Association (CREA), saw slight increases in June 2024, reflecting both cautious optimism and ongoing challenges. Despite a slight uptick in sales, the overall market remains subdued, influenced by a complex interplay of economic factors and government policies.
According to CREA, housing sales increased by 3.7% from May to June, signalling a modest improvement in market activity. However, on an annual basis, housing sales were down by 9.4% last month, underscoring persistent challenges within the market. The Bank of Canada’s recent 25 basis point interest rate cut aimed at stimulating economic activity has yet to significantly boost housing demand, highlighting broader economic uncertainties impacting consumer behaviour.
In terms of pricing, CREA reported that the not-seasonally adjusted national average home price in June stood at $696,179, representing a slight decline of 0.4% from May and a 1.6% decrease compared to the same period last year. However, CREA’s Home Price Index, considered a more accurate reflection of market trends than average prices, saw a marginal increase of 0.1% from May to June, marking the first monthly gain in 11 months.
We strongly feel that once there are a few rate drops, the pent-up demand for real estate will materialize into a significant increase in sales. However, regional disparities persist, with major urban centres experiencing different dynamics compared to smaller municipalities and rural areas, influencing both demand and pricing trends.
The real estate market is highly influenced by mortgage rates. Housing sales tend to follow rates fairly closely in an inverse relationship. As rates drop, demand increases and prices increase assuming all other factors such as supply remain stable. We recently saw the reverse where rates increased significantly and then housing sales followed in the opposite direction.
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