Despite Rising June Sales, CREA Reduces Housing Market Forecast for 2024
The Canadian Real Estate Association is adjusting its housing market forecast for the rest of the year due to higher levels of supply and a subdued spring season caused by fewer expected interest rate cuts in 2024.
On July 12, the association revised its forecast, now anticipating a gradual recovery in the national housing market, with 472,395 properties expected to be sold this year—a 6.1 percent increase from 2023. This is lower than the previous forecast in April, which predicted a 10.5 percent gain.
The updated forecast coincided with the release of CREA’s latest data on national home sales and prices for June.
In June, the number of homes sold on a year-over-year basis dropped by 9.4 percent, reflecting stronger activity in the spring of 2023. However, sales saw a 3.7 percent increase on a month-over-month basis.
“While June wasn’t a standout month for the Canadian housing market, numbers did show some improvement compared to the previous month following the first rate cut by the Bank of Canada,” said Shaun Cathcart, senior economist at CREA.
The average price of a home sold last month was $696,179, a 1.6 percent decrease from June 2023. Nationally, prices rose by 0.1 percent compared to May, marking the first month-over-month increase in 11 months.
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“This could signal an improvement in market activity in the near future,” noted TD economist Rishi Sondhi in a statement.
“We expect the market to strengthen in the latter part of the year as the economy remains stable and more substantial interest rate adjustments are made. However, affordability challenges may limit the extent of this improvement,” added Sondhi.
CREA now predicts a modest 2.5 percent increase in the average home price for 2024, reaching $694,393, down from the prior forecast of a 4.9 percent hike.
The Bank of Canada initiated its rate reduction process with a cut on June 5, bringing the key interest rate down to 4.75 percent from five percent.
At the end of June, there were approximately 180,000 properties listed for sale across Canada, a 26 percent increase from the previous year but still below the historical average of around 200,000 for this time of the year.
New listings saw a 1.5 percent increase on a month-over-month basis in June, driven by the Greater Toronto Area and B.C. Lower Mainland.
