Canada’s housing market is showing signs of growth, but the pace of recovery remains slower than initially expected. This tempered momentum may result in a more substantial spillover effect heading into 2025.
According to the most recent data from the Canadian Real Estate Association( CREA), buying and selling activity increased by 1.9% in September from August. That means that home sales have increased quietly for the third consecutive month in a row. But, CREA’s Senior Economist, Shaun Cathcart, noted that domestic sales are now up by three after rate increases in the coming months.
Cathcart explained that those cumulative gains start to add up when sales rise over several consecutive months following interest rate cuts. Although individual monthly increases haven’t been significant, home sales have climbed 6% since May, reaching their highest level since July 2023. However, Cathcart acknowledged that sales remain well below long-term historical averages while activity improves. He added that continued declines in interest rates will likely push sales higher moving forward.
CREA’s Updated Housing Market Forecast
Interest rates are anticipated to remain low as the economy cools over, according to the Bank of Canada. In September, according to Statistics Canada’s most recent data, inflation dropped to 1.6% from a year ago, resulting in a 0.5% cut in the Bank of Canada’s policy rate on October 23.
The Bank of Canada’s policy rate has dropped to 3.7%, much faster than Canadian economists had anticipated.
Historical data indicate that neutral interest rates are currently hovering at 3.5%, roughly 150 basis points below the 5% peak seen last year and early this year.
Sales have only slightly decreased since CREA’s previous forecast, which had predicted a gradual reversal of buyers ‘expectations with the first-rate cuts this summer.
Cathcart pointed out that some buyers planning to enter the market might now choose to delay their purchases. With interest rates expected to continue falling, these buyers may feel it’s worth waiting six to seven months for better affordability rather than rushing into the market now.
As a result, the 2024 market is anticipated to remain in a more holding pattern until spring, when a significant rebound is expected. According to CREA, home sales will be 468,909 transactions higher than those in 2023, up 5.2% from 2023. The biggest gains are made in Ontario (9.9%), British Columbia (8.5%), and Saskatchewan (6%), which will increase by 6.6% to 499 and 816 in 2025.
Home Prices in Canada
In September 2024, the national average home price was $669,630. The MLS® Home Price Index, a unique tool used by REALTORS® to accurately assess a neighborhood’s home price levels and trends, remained unchanged in September, growing only 0.1% from August.
Cathcart described the month’s price trends as “flat as a pancake,” emphasizing how unusual such stagnation is historically. He added that significant regional variations exist while home prices have remained flat at the national level. Provinces such as Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, and Nova Scotia have seen prices rising steadily.
Cathcart further explained that softness in Ontario—Canada’s largest housing market—has been enough to offset price gains seen in other parts of the country, creating balance in the national figures.
According to CREA’s most recent report, the average national price will increase by 0.9% between 2023 and 2024, reaching $683,200. The average price is expected to grow by 4.4% to reach $713,375 in 2025.
James Mabey, CREA’s Chair and an Alberta REALTOR®, emphasized the importance of professional expertise during this transitional period. He encouraged buyers and sellers to connect with a local REALTOR® to navigate their options, whether preparing for a move this fall or getting ready for a busy spring market in 2025.
