After showing early signs of renewed momentum in June, Canada’s housing market took a step back last month, according to recent data from the Canadian Real Estate Association (CREA).
The Latest Figures Suggest a Slower Recovery than Expected
While there was optimism in the air after the Bank of Canada began cutting interest rates for the first time since 2020, the latest figures suggest that the real estate market’s resurgence may be slower than expected. The seasonally adjusted national benchmark sale price remained almost unchanged at $718,700 in July – a 0.2 per cent increase month over month but a decline of 4.2 per cent year over year.
Home Sales Across Canada Edged Down by 0.7 Per Cent
According to CREA’s latest report, home sales across the Canadian MLS systems edged down by 0.7 per cent in July, giving back a small portion of the gains made in June. This dip in sales may seem like a setback, but some experts believe it’s just a temporary pause.
The Market Has Faced Several Headwinds Over the Past Year
The market has faced several headwinds over the past year, including high interest rates and affordability challenges, which have sidelined many potential buyers. Phil Soper, chief executive of Royal LePage, pinpointed what he believes is one of the key issues stalling the market: existing homeowners are returning to the market, while first-time buyers remain on the sidelines.
First-Time Buyers Expected to Re-Enter the Market in the Second Half of the Year
Soper expects this to change in the second half of the year, predicting that once first-time buyers re-enter the market, the entire real estate cycle will accelerate, including activity in more expensive, move-up homes. As of the end of July, there were about 183,450 properties listed for sale on all Canadian MLS Systems – up 22.7 per cent from a year earlier but still about 10 per cent below historical averages for this time of year.
Regional Variations Suggest That Some Markets Are Cooling, While Others Are Renewed
Regionally, the market showed mixed results. Calgary and the Greater Toronto Area (GTA) experienced declines, but these were offset by gains in other areas such as Edmonton and Hamilton-Burlington. The regional variations suggest that while some markets are cooling, others are beginning to see renewed interest from buyers.
The Stage is Being Set for a More Active Housing Market
James Mabey, chair of CREA, said, "While it wasn’t apparent in the July housing data from across Canada, the stage is increasingly being set for the return of a more active housing market. At this point, many markets have a healthier amount of choice for buyers than has been the case in recent years, but the days of the slower and more relaxed house hunting experience may be somewhat numbered."
What Does This Mean for Homebuyers and Sellers?
As the market continues to evolve, homebuyers and sellers should remain informed about local trends and developments. With first-time buyers expected to re-enter the market in the second half of the year, activity is likely to pick up, including in more expensive, move-up homes.
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