Bank of Canada Rate Cut Sparks Housing Market Revival

CREA predicts the end of a slow month as interest rates drop, potentially boosting the housing market. Read more on the latest rate cut impact.

The Canadian real estate market experienced a slow month in May, with the national benchmark home price dropping to $714,300, a decrease of 0.2 per cent from April to May 2024 and 2.4 per cent year over year. Despite these numbers, the Canadian Real Estate Association (CREA) remains hopeful, citing the recent rate cut by the Bank of Canada as a potential catalyst for market revitalization.

Home sales across Canadian MLS systems saw a slight dip of 0.6 per cent month over month in May, staying below the ten-year average. This decline occurred despite a 0.5 per cent increase in new listings, indicating a relatively stagnant market. On a year over year basis, home sales fell by 5.9 per cent nationwide, with Greater Vancouver and Greater Toronto experiencing significant decreases of 19.8 per cent and 22.2 per cent, respectively. Eighteen out of the 26 regions monitored by CREA reported a decline in sales compared to the previous year.

The number of properties listed for sale saw a notable increase of 28.4 per cent compared to the previous year, reaching approximately 175,000 by the end of May 2024. Active residential listings in Ontario surged by 63.9 per cent compared to the same time last year, marking the highest level of active listings for the month of May in over five years. CREA noted that this rise in inventory creates a more favorable market for buyers, with the sales-to-new listings ratio easing to 52.8 per cent in May, down from 53.3 per cent in April.

In a separate announcement, the Canada Mortgage and Housing Corporation (CMHC) revealed that housing starts soared to 264,500 annualized units in May, the highest level since September. This increase was primarily driven by a 13 per cent rise in multi-unit starts, including condos, while single-unit starts also saw a modest uptick of two per cent during the same period.

While the Canadian real estate market experienced a sluggish month in May, there is optimism for a potential turnaround with the recent rate cut and increased inventory providing a more favorable market for buyers.