Signs of a burgeoning housing rebound fell flat as temperatures cooled across the country in December, but the Canadian Real Estate Association sees the stars aligning for a busy spring market.
CREA said Wednesday that home sales fell 5.8 per cent on a month-to-month basis in December.
Despite that, a busy October and November meant sales were up 10 per cent in the final quarter of the year compared with the three months prior.
December’s sales figures remain 13 per cent higher than they were in May, a month before the Bank of Canada started lowering its benchmark interest rate.
That easing cycle has since seen the central bank lower its policy rate by 1.75 percentage points, including a pair of back-to-back half-point cuts in October and December. Most economists expect a few more interest rate cuts from the central bank this year.
CREA senior economist Shaun Cathcart said that if the Bank of Canada delivers a couple more cuts in the months to come and signals the policy rate may have settled at the bottom, that could set up a wave of activity in the already traditionally busy spring market.
“Our forecast continues to be for a significant unleashing of demand in the spring of 2025, with the expected bottom for interest rates coinciding with sellers listing properties for sale in big numbers once the snow melts,” he said in a statement Wednesday.
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Higher interest rates from the central bank feed into mortgage rates in the housing market, making it harder to qualify for a home loan. Lower rates have the opposite effect, stimulating demand.
Sales fell more sharply than new listings were added to the market in December, CREA noted, which helped to ease the sales-to-new listings ratio, a common measure for balance in the housing market.
Sales-to-new-listings fell to 56.9 per cent in December, down from a 17-month high of 59.3 per cent in November, and just above the long-term national average of 55 per cent. Readings between 45 and 65 per cent typically indicate “balanced” housing market conditions, according to CREA.
On a non-seasonally adjusted basis, the national average home price in December was $676,640, up 2.5 per cent from last year.
The CREA National Home Price Index, a more like-for-like comparison of dwelling prices, rose 0.3 per cent year over year, a second consecutive monthly increase.
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