Housing Market Remains Steady

Existing home sales rose by 3.7 percent m/m (seasonally adjusted) in June and remained at the lower end of seasonal norm. While early indications from local real estate boards suggested weakness across a few major centers, we saw gains on a national basis. The upturn in sales may be in part due to some buyers seeing the first rate cut by the Bank of Canada a signal to get off the sidelines.

Listings continue to increase but we also saw an increase in the sales-to-new-listing ratio and with it an inching up in house prices. While there was a slight increase in average prices, they are down about 13 percent from the peak of early 2022. Nationally, inventories are down to 4.2 percent from 4.3 percent in May, but are still at higher levels compared to pre-pandemic numbers.

While sales remain weak, the latest data points to some early momentum in the market. With more than 2 million newcomers to Canada in recent years, there are plenty of new homebuyers waiting to move from renting to owning. We expect that sales activity will pick up more rapidly by the fourth quarter, but affordability will remain the biggest challenge to home ownership. While home prices in 2024 remain steady, we expect to see more upward movement in prices in 2025 as the undersupply of housing remains a key driver of the housing market.