Canadian Housing Market Sees Modest Decline Amidst Rising Inventory and Interest Rate Cuts
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In May 2024, national home sales in Canada saw a slight decline of 0.6% month-over-month, with a significant drop of 5.9% compared to May 2023. Sales activity remained below the 10-year average, despite a 0.5% month-over-month increase in newly listed properties. The overall market activity reflects a slower pace, with sales lagging behind the increase in new listings.
As a result of slower sales and an influx of new listings, the number of homes for sale in Canada increased significantly, reaching about 175,000 properties by the end of May 2024, a 28.4% rise from the previous year. Despite this increase, the inventory levels remain below historical averages. The inventory levels rose to 4.4 months nationally, the highest since the fall of 2019. Meanwhile, the MLS Home Price Index saw a minor dip of 0.2% month-over-month, and the national average sale price decreased by 4.0% year-over-year, with Calgary, Edmonton, and Saskatoon being exceptions with steady price increases.
The Bank of Canada's recent 25 basis point rate cut is expected to have a significant psychological impact on potential homebuyers, possibly reviving pent-up demand. The overall effect of this rate cut on the housing market will depend on the pace and extent of further rate reductions. While May was relatively quiet, the coming months may see increased activity if the rate cut encourages more buyers to enter the market.
Read the full article on: REAL ESTATE MAGAZINE
