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The spring Canadian housing market, which is usually very busy, stalled because homebuyers chose to remain on the fence until the Bank of Canada confirmed its first interest rate reduction.
According to preliminary data, home sales in May were lower than expected on an annual basis in Toronto (+12.7%), Vancouver (-19.9%), Ottawa (-9.2%), and Montreal (+4%).
Robert Hogue, RBC’s economist, wrote that buyers were in an “await-and-see” mode during May as he feared a possible interest rate cut. Bank of Canada Interest Rate Cut.
Calgary was the only exception, with sales increasing 7.3% compared to a year ago.
A slowdown in home sales led to an increase in inventory, and this has begun to affect recent increases in the average price of homes.
Hogue said that the recent mild rise in house prices has slowed down. Any further easing depends largely on the buyers’ response to Bank of Canada’s rate-cutting initiative in June. We believe it will take a number of cuts before a significant mass of buyers are convinced to come off the sidelines.
He said that the prices will likely remain unchanged until then, before beginning a slow increase. He added that with the pent up demand, buyers may jump in more quickly and set prices higher.
Housing market in the region
Take a look below at some of the largest real estate boards in the United States.
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Greater Toronto Area
| May 2024 | YoY Change % | |
|---|---|---|
| Sales | 7,013 | -12.7% |
| All housing types – Benchmark Price | $1,165,691 | -2.5% |
| Find out about new listings | 18,612 | +21.1% |
| Listings Active | 21,760 | +83.3% |
While interest rates were high, buyers continued to enjoy slightly lower prices in May compared with last year. “We have seen the selling price adjust in order to offset the effect of higher mortgage rate,” stated TRREB’s Chief Market Analyst Jason Mercer.
He added that “affordability will continue to improve as the trend of borrowing costs continues to decrease.” As demand increases, home prices will continue to rise as buyers compete for the best deals.
Greater Vancouver Area
| May 2024 | Change YoY in % | |
|---|---|---|
| Sales | 2,722 | -19.9% |
| All housing types – Benchmark Price | $1,212,000 | +2.3% |
| Find out about new listings | 6,384 | +12.6% |
| Listings Active | 13,600 | +46.3% |
The May sales data surprised us because they were lower than we expected at this time of year. However, the newly listed home for sale numbers are still carrying the momentum from the April figures, said Andrew Lis. He is the Director of Economics and Data Analytics of Greater Vancouver Realtors.
He added: “It is natural to attribute these trends to one or more factors, but we are seeing a convergence of many different things that influence buyer and seller decision-making in the current market.” It’s everything, from increased borrowing costs to concerns about the economy to government policy intervention.
Montreal Census Metropolitan Area
| May 2024 | YoY Change % | |
|---|---|---|
| Sales | 4,863 | +4% |
| Median price (single family detached) | $575,500 | +5% |
| The Median Condo Price | $410,000 | +2% |
| Find out about new listings | 7,005 | +16% |
| Listings Active | 18,996 | +22% |
The sales in May were only 4% higher than in May 2023. However, this is a small increase compared with the market strength at the same time last year. Charles Brant said, QPAREB Director of Market Analysis.
Calgary
| May 2024 | Change YoY in % | |
|---|---|---|
| Sales | 2,881 | +7.3% |
| All housing types – Benchmark Price | $585,000 | +10.3% |
| Find out about new listings | 3,491 | +11.5% |
| Listings Active | 2,711 | -16.2% |
Ann-Marie Lurie, CREB’s Chief Economist said that while supply levels were still decreasing, a large part of it was due to lower priced homes. The persistently high interest rates in the marketplace are pushing demand for more affordable properties and at the same driving listings growth of higher priced homes.
Ottawa
| May 2024 | Change YoY in % | |
|---|---|---|
| Sales | 1,545 | -9.2% |
| All housing types – Benchmark Price | $651,300 | +1.2% |
| Find out about new listings | 3,034 | +26.2% |
| Listings Active | 3,552 | +59.4% |
Curtis Fillier, OREB’s President said that Ottawa’s spring early market had been unsurprisingly steady. The increase in listings shows that more sellers feel confident about the future of their properties as activity on the market returns.