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Canada's housing market exhibited early signs of revival in June 2024, following a key interest rate cut by the Bank of Canada at the beginning of the month. This development has spurred a notable increase in home sales activity, reflecting a cautiously optimistic outlook for the market.
Home Sales and Listings Activity
Home sales across Canadian MLS® Systems rose by 3.7% between May and June 2024. By the end of June, there were approximately 180,000 properties listed for sale, a 26% increase from the previous year but still below the historical average of 200,000 for this period. On a seasonally adjusted basis, the end-of-June supply saw a modest 0.5% rise from May, suggesting a potential slowdown in the national inventory buildup.
New listings experienced a 1.5% month-over-month increase in June, driven predominantly by the Greater Toronto Area and British Columbia’s Lower Mainland. This rise in listings was smaller compared to the sales gain, resulting in a tighter national sales-to-new listings ratio of 53.9%, up from 52.8% in May. The long-term average for this ratio stands at 55%, indicating balanced market conditions when it falls between 45% and 65%.
Inventory and Market Balance
By the end of June 2024, there were 4.2 months of inventory on a national basis, a slight decline from 4.3 months at the end of May. This marked the first month-over-month drop in inventory levels for 2024, although the long-term average remains at about five months of inventory.
Home Price Trends
The National Composite MLS® Home Price Index (HPI) saw a slight increase of 0.1% from May to June, marking the first month-over-month gain in 11 months. Despite this minor uptick, home prices generally remained stable across much of the country. However, regions like Calgary, Edmonton, and Saskatoon, along with Montreal and Quebec City to a lesser extent, have seen steady price increases since early last year.
Recent upward movements in home prices were also observed in other markets, including Ontario cottage country, Mississauga, Hamilton-Burlington, Kitchener-Waterloo, Cambridge, London-St. Thomas, and Halifax-Dartmouth. Despite these regional gains, the non-seasonally adjusted National Composite MLS® HPI stood 3.4% below June 2023 levels. This decline reflects a cooling from the price surge witnessed in April, May, June, and July of the previous year.
Market Outlook
The Bank of Canada's interest rate cut has provided a stimulus for the housing market, encouraging increased activity and a slight uptick in prices. While inventory levels and new listings are rising, the market remains below historical averages, indicating room for further growth. The balance between sales and new listings suggests a stable environment, potentially setting the stage for more robust market conditions in the coming months.
