Canada Housing Market Pauses Amid Interest Rate Cuts and Regional Variations
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In July, Canada’s housing market experienced a brief pause in activity, following early signs of renewed momentum in June, as reported by the Canadian Real Estate Association (CREA). Despite two consecutive interest rate cuts by the Bank of Canada, housing activity showed only modest changes. National home sales saw a slight decrease of 0.7% month-over-month, while the number of newly listed properties increased by 0.9%. The MLS Home Price Index edged up by 0.2% month-over-month but remained down 3.9% year-over-year, with the national average sale price slightly lower at $667,317.
Market interest has notably increased since the rate cuts. This surge in interest is driven by cheaper borrowing costs due to lower variable and fixed mortgage rates, coupled with growing demand, particularly from new Canadians. Pent-up demand is expected to lead to a busy fall season in the housing market, although economic conditions still present challenges, especially for renters and first-time homebuyers.
Regionally, the housing market's performance varies, with Alberta, Nova Scotia, and New Brunswick showing strength, while Ontario struggles with slower conditions. While recent rate cuts have sparked renewed activity, more significant cuts may be needed to sustain this momentum. Robert Hogue, RBC Economics’ assistant chief economist, expects that while the recent rate cuts marked a turning point, deeper cuts are essential to meaningfully boost demand and end the slump in most Canadian housing markets by year’s end. Nationally, listings are up nearly 23% year-over-year, indicating a balanced market despite regional differences.
Read the full article on: REAL ESTATE MAGAZINE
