Following the Bank of Canada’s third interest rate cut of the year, national home sales increased slightly in September compared to August. This follows a similar pattern of gains recorded in the months following the first two rate cuts, reported the Canadian Real Estate Association on Tuesday.
“Sales gains are now three for three in the months following interest rate cuts, which is a trend even though the increases weren’t headline-grabbing,” said Shaun Cathcart, CREA’s Senior Economist. “That said, with the pace of rate cuts now expected to be much faster than previously thought, it’s possible some buyers may choose to hold off on a purchase for now. This could further boost the rebound expected in 2025 at the expense of the last few months of this year.”
Home sales recorded over Canadian MLS Systems climbed 1.9% on a month-over-month basis in September 2024, reaching their highest level since July 2023. The national increase was led by the Greater Toronto Area and Hamilton–Burlington, Montreal and Quebec City, as well as Greater Vancouver and Victoria, said the national association. Sales were up 6.9% compared to a year ago.
CREA said the National Composite MLS Home Price Index (HPI) inched up 0.1% from August to September.The non-seasonally adjusted National Composite MLS®HPI stood 3.3% below September 2023, a smaller decline compared to the 3.9% declines recorded in July and August. It’s likely negative year-over-year comparisons will continue to shrink given the weakness in prices seen towards the end of 2023.
The actual (not seasonally adjusted) national average home price was $669,630 in September 2024, up 2.1% from September 2023, added the report.
“New listings posted a 4.9% month-over-month rise in September, as sellers listed properties in larger than normal numbers for the first weeks of the month. Gains were broad-based, with most of the country’s biggest markets topping the list,” said CREA. “There were 185,427 properties listed for sale on all Canadian MLS® Systems at the end of September 2024, up 16.8% from a year earlier but still below historical averages of around 200,000 listings for that time of the year.
“With sales rising by less than new listings in September, the national sales-to-new listings ratio eased to 51.3%, down from 52.8% in August. This measure could be reversed if all those listings result in higher sales in October. The long-term average for the national sales-to-new listings ratio is 55%, with a sales-to-new listings ratio between 45% and 65% generally consistent with balanced housing market conditions.”
The expected pace of interest rate cuts has changed dramatically since the Canadian Real Estate Association (CREA) published its summer forecast for home sales activity and average home prices via Multiple Listing Service® (MLS®) Systems of Canadian real estate boards and associations for 2024 and 2025. Markets now expect the Bank of Canada to get back to a “neutral” rate by sometime next spring or summer, as opposed to the multi-year path anticipated back in July.
CREA also said in another report that 468,900 residential properties are forecast to trade hands in 2024, a 5.2% increase from 2023. The national average home price is forecast to edge up 0.9% on an annual basis to $683,200 in 2024 and by 4.4% to $713,375 in 2025. National home sales are forecast to climb a further 6.6% to 499,800 units in 2025 as interest rates continue to decline and demand flows back off the sidelines.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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