When the pandemic struck in early 2020, home buyers across the country went straight to the sidelines. Sales plummeted due to an abundance of caution about COVID-19, most realtors stopped doing open houses for listings and new home builders shut down their most important marketing tool, showhomes. Almost overnight the annual rate of sales fell from about 45,000 to about 13,000, but as the year progressed, buyers came back into the market and by January 2021 the annual rate of sales soared to 65,000, against a 10-year average of 40,000 sales. Just over a year later, the Bank of Canada pushed its overnight rate down to .25%, with mortgage rates following in lock step, inciting a rush of buyers that resulted in a shortage of housing supply, exacerbated by the Government of Canada raising immigration to dangerous levels. Interest rates started to increase, supply dwindled as home prices soared and buyers pulled their listings because they couldn’t find buyers. Housing markets went on roller coaster rides that appear, for the most part, to be ending. In its monthly report released on Friday, the Canadian Real Estate Association (CREA) says activity in Canada’s housing markets saw some early signs of renewed life in June, with a 3.7% increase in sales in June from May, following the Bank of Canada’s interest rate cut at the beginning of June. “It wasn’t a ‘blow the doors off’ month by any means, but Canada’s housing numbers did perk up a bit on a month-over-month basis in June following the first Bank of Canada rate cut,” said Shaun Cathcart, CREA’s senior economist. “Year-over-year comparisons don’t look great mainly because of how many buyers were still jumping into the market last spring, but that’s a story about last year.” “What’s happening right now is that sales were up from May to June, market conditions tightened for the first time this year, and prices nationally ticked higher for the first time in 11 months.” .Supply is still a big part of the housing markets’ stories. CREA counts the total at 180,000 in June, a 26% increase over June 2023, but still fewer than the 10-year average of about 200,000 for late spring. “On a seasonally adjusted basis, the end-of-June supply number was up 0.5% from the end of May, suggesting the national inventory buildup may be slowing down,” says Cathcart, adding new listings posted a 1.5% month-over-month increase in June, led by the Greater Toronto Area and British Columbia’s Lower Mainland. The CREA report indicates there were 4.2 months of inventory on a national basis at the end of June 2024, down from 4.3 months at the end of May, the first time the number of months of inventory has fallen month-over-month in 2024. The long-term average is about five months of inventory. The National Composite MLS® Home Price Index (HPI) inched up 0.1% from May to June. While a small increase, it was noteworthy in that it was the first month-over-month gain in 11 months, says Cathcart. “Regionally, prices are still generally sliding sideways across much of the country,” he says. “The exceptions remain Calgary, Edmonton, and Saskatoon and to a lesser extent Montreal and Quebec City, where prices have steadily moved higher since the beginning of last year.” “That said, there have been some more recent upward movements in prices in other markets, including across Ontario cottage country, Mississauga, Hamilton-Burlington, Kitchener-Waterloo, Cambridge, London-St. Thomas, and Halifax- Dartmouth.” The national average home price was $696,179 in June 2024, down 1.6% from June 2023. The national average price is heavily influenced by the two most expensive markets, the Greater Toronto Area and Great Vancouver Area. .“The second half of 2024 is widely expected to see the beginnings of a slow and gradual return of buyers into the housing market,” said James Mabey, chair of CREA. “Those buyers will face a considerably different shopping experience depending on where they are in Canada, from multiple offers in places like Calgary, to the most inventory to choose from in over a decade in places like Toronto.” Robert Hogue, assistant chief economist at RBC Economics says the June figures showed a modest recovery was taking place, but further rate cuts are essential to improving conditions for homebuyers and owners. “Additional interest rate cuts are poised to stimulate homebuyer demand across the country,” said Hogue. “But the boost will likely be incremental. We believe rates must come down materially before they make a meaningful dent in ownership costs, especially in Canada’s most expensive markets.” “That means the overall recovery will likely remain modest throughout the rest of 2024 before accelerating somewhat next year as interest rates continue a downward trajectory."
