Two consecutive rate cuts by the Bank of Canada do not appear to be having a significant effect on resale housing. Analysts are calling the market “stable”.
The Canadian Real Estate Association reports that sales and prices dropped slightly in July. The number of properties changing hands dipped 0.7% compared to June. (Year-over-year sales are up 4.8% from July of 2023.)
The national average home price is $667,000, down 4.0% from June and down 0.2% compared to last July. CREA’s preferred pricing measure, the MLS Home Price Index, was 3.9% lower than a year ago, but showed a 0.2% increase over June.
The inventory of homes for sale is up nearly 23% from a year ago with a 0.9% increase from June to July, giving buyers improved choice. There are more than 180,000 homes listed in Canada.
While CREA is forecasting a more vigorous market for the second half of this year, the July numbers should help calm fears of a price spike triggered by falling interest rates. Most analysts say the central bank’s trend-setting policy rate will have to drop a full percentage point before buyers and sellers return to the market in significant numbers.
Falling interest rates may be helping to get new homes built. Canada Mortgage and Housing Corporation reports home starts jumped nearly 16% in July compared to June, and are at their highest level in more than a year. Much of the increase was in multi-unit buildings and most of it was in Ontario.