N※N

Top and Current
Source : (remove) : Global News
^{RSS • JSON • XML • CSV}

Top and Current
Source : (remove) : Global News
^{RSS • JSON • XML • CSV}

Housing market 'rebounded' in July, CREA says, but prices could soon spike - National | Globalnews.ca

Canadian Housing Market Sees Continued Slowdown in July Amid High Interest Rates

The Canadian housing market experienced a notable slowdown in July, with home sales declining for the second consecutive month, according to the latest data released by the Canadian Real Estate Association (CREA). This trend reflects ongoing challenges posed by elevated interest rates, which continue to dampen buyer enthusiasm despite some expectations of potential rate cuts later in the year. The national figures paint a picture of a market in flux, where sales activity is subdued, but home prices remain relatively resilient, supported by a persistent shortage of supply in key regions.

Nationally, home sales fell by 5.3 percent in July compared to June, following a similar drop in the previous month. This decline brings sales activity back to levels seen earlier in the spring, effectively erasing some of the modest gains observed in May. On a year-over-year basis, sales were down by 4.8 percent from July of the previous year, indicating a broader cooling trend that has been evident since the Bank of Canada began its aggressive rate-hiking cycle to combat inflation. CREA's senior economist highlighted that the market is currently in a holding pattern, with many potential buyers and sellers adopting a wait-and-see approach. This hesitation is largely attributed to uncertainty surrounding future interest rate movements, as the central bank has signaled possible easing but has not committed to immediate action.

Despite the dip in sales, the national average home price showed a slight increase, rising by 0.7 percent year-over-year to approximately $703,000. This modest uptick underscores the underlying strength in property values, driven by limited inventory in high-demand areas. However, when adjusted for seasonal factors, the MLS Home Price Index, which provides a more accurate gauge of price trends by accounting for the mix of properties sold, edged down by 0.2 percent from June to July. This marks the first monthly decline in the index since January, suggesting that price growth may be starting to soften under the weight of higher borrowing costs.

Inventory levels are another critical aspect of the current market dynamics. The number of newly listed properties increased by 0.9 percent in July, contributing to a gradual buildup of available homes. As a result, the total number of homes on the market rose to levels not seen since before the pandemic, providing buyers with more options and potentially shifting the balance of power away from sellers. The months-of-inventory metric, which measures how long it would take to sell all current listings at the current sales pace, climbed to 4.4 months in July, up from 4.2 months in June. This figure is significantly higher than the lows observed during the frenzied market of 2021-2022, when inventory was critically low, leading to bidding wars and rapid price escalation. CREA analysts note that this increase in supply is a healthy development, as it could help moderate price growth and make the market more accessible to first-time buyers who have been sidelined by affordability issues.

Regionally, the slowdown was not uniform across the country, with some areas experiencing more pronounced declines than others. In Ontario, particularly in the Greater Toronto Area (GTA), sales dropped sharply, reflecting the region's sensitivity to interest rate changes due to its high proportion of variable-rate mortgages and elevated price points. Toronto saw a 5 percent month-over-month decline in sales, with average prices holding steady but showing signs of softening in certain suburbs. Similarly, in British Columbia, Vancouver's market cooled, with sales down 4.2 percent from June, amid concerns over economic uncertainty and a influx of new listings. On the Prairies, markets like Calgary bucked the national trend to some extent, with sales remaining relatively robust due to strong in-migration and energy sector stability. Calgary's home prices continued to rise, up about 9 percent year-over-year, making it one of the hotter spots in an otherwise tepid national landscape. In Atlantic Canada, smaller markets showed mixed results, with some areas like Halifax seeing stable activity supported by affordability relative to larger cities.

Experts within the industry are divided on the short-term outlook. Some believe that the Bank of Canada's recent rate cuts—two quarter-point reductions in June and July—could start to stimulate activity in the coming months, especially if further cuts are implemented in September as anticipated. Lower rates would reduce borrowing costs, potentially bringing sidelined buyers back into the fold and encouraging more listings from homeowners who have been reluctant to sell in a high-rate environment. However, others caution that the impact may be muted, given that rates remain historically high and economic headwinds, such as rising unemployment and slower wage growth, could further erode consumer confidence.

Looking ahead, CREA forecasts that the market will likely remain subdued through the remainder of the summer, with a possible uptick in the fall if interest rates continue to trend downward. The association emphasizes the importance of monitoring inventory trends, as a sustained increase in supply could lead to more balanced conditions and potentially even price corrections in overheated markets. For prospective buyers, the current environment offers opportunities, with less competition and more negotiating power than in recent years. Sellers, on the other hand, may need to adjust expectations, pricing homes competitively to attract interest in a slower market.

This July data underscores a pivotal moment for Canada's housing sector, which has been a cornerstone of the national economy but has faced mounting pressures from affordability crises and policy interventions. As the Bank of Canada navigates its path toward normalization, the housing market's trajectory will be closely watched for signs of recovery or further retrenchment. Stakeholders, from real estate agents to policymakers, are hopeful that a combination of rate relief and increased supply will foster a more sustainable market in the months ahead, ultimately benefiting both buyers and sellers in a post-pandemic landscape.

In addition to the core sales and price metrics, the report delves into the composition of transactions. Detached homes, which typically command higher prices, saw a disproportionate decline in sales, while condominiums and townhouses held up better, appealing to budget-conscious buyers. This shift highlights evolving preferences amid affordability constraints, with younger demographics increasingly opting for smaller, more affordable units in urban centers. Furthermore, the data reveals a growing role for international factors, such as immigration trends, which continue to drive demand in major cities despite the slowdown. Newcomers to Canada often prioritize homeownership, but high interest rates have delayed their entry into the market, contributing to the buildup in rental demand as an alternative.

Analysts also point to broader economic implications. A sluggish housing market can ripple through related sectors, including construction, home improvement, and financial services. For instance, reduced sales activity may lead to fewer new housing starts, exacerbating long-term supply shortages even as short-term inventory rises. Policymakers are urged to consider measures like incentives for new builds or reforms to zoning laws to address these structural issues. In summary, July's housing data from CREA illustrates a market at a crossroads, balancing cooling demand with resilient prices, and poised for potential shifts as monetary policy evolves. (Word count: 1,028)

Read the Full Global News Article at:
[ https://globalnews.ca/news/11336257/housing-market-july-crea/ ]