The start of interest rate cuts from the Bank of Canada has done little to stoke a fire in the Canadian housing market, fresh data from July shows.
The Canadian Real Estate Association (CREA) said Thursday that home sales retreated by 0.7 per cent month to month in July, giving back some of the jump seen after the first central bank rate cut in June.
The Bank of Canada has delivered two quarter-percentage-point rate cuts in back-to-back months, the most recent coming on July 24, impacting only the final week of the month’s sales.
“While there were early signs of renewed momentum in June following the Bank of Canada’s first interest rate cut since 2020, activity in Canada’s housing market took a pause in July,” CREA said in a release.
But CREA chair James Mabey argued in a statement that while July home figures did not show signs of homebuyers rushing back in the face of lower borrowing costs, “the stage is increasingly being set for the return of a more active housing market.”
Declines in the benchmark interest rate in Canada help to lower the barrier to entry into the housing market, making it easier for prospective buyers to afford a home.
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New listings in the Canadian housing market were up 0.9 per cent from June, led by a jump in new supply in Calgary.
At the end of last month, there were roughly 183,450 properties listed for sale in Canada, up 22.7 per cent from last year but around 10 per cent lower than historical averages for this time of year, CREA said.
On a non-seasonally adjusted basis, the national average home price in Canada last month was $667,317, down 0.2 per cent from July 2023.
CREA’s Home Price Index, which gives a like-for-like comparison of property types, was up 0.2 per cent from June to July. That marks the second and largest gain in the last year, the association said.
Prices are growing in a majority of markets, CREA said, but appreciation is “held back” by slower activity in Ontario and British Columbia.
More to come…
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