Canadian housing markets remained relatively calm in May, with national home sales edging down 0.6% month-over-month and new listings increasing by 0.5%. This slight decrease in activity comes as the Bank of Canada recently cut interest rates, which is expected to boost market activity in the coming months.
“May was another sleepy month for housing activity in Canada, although it may prove to be the last of those now that interest rates have moved lower,” said Shaun Cathcart, Senior Economist at the Canadian Real Estate Association (CREA). The Bank of Canada’s June 5 rate cut of 25 basis points is anticipated to have a significant psychological effect on potential buyers who have been hesitant to enter the market.
In May 2024, actual monthly activity was 5.9% below the levels of May 2023. The number of newly listed properties increased, resulting in about 175,000 properties listed for sale by the end of the month, a 28.4% rise from the previous year. However, this number remains below historical averages.
Home prices showed little change, with the MLS Home Price Index (HPI) dipping 0.2% from April to May and down 2.4% year-over-year. The actual national average sale price decreased by 4% from May 2023 to $699,117. Notably, regions such as Calgary, Edmonton, and Saskatoon have seen steady price increases since the beginning of last year.
With a slight dip in sales and a modest increase in new listings, the national sales-to-new listings ratio eased to 52.8% in May, compared to 53.3% in April. This ratio remains within the long-term average of 55%, indicating balanced housing market conditions.
As of the end of May, the national inventory of homes for sale stood at 4.4 months, the highest level since the fall of 2019, excluding the COVID-19 pandemic volatility. The long-term average inventory is about five months.
Bild: Canadian Real Estate Association
Regionally, prices are largely stable with minor fluctuations. For example, in the Lower Mainland of British Columbia, the benchmark price stood at $1,115,300, showing a slight increase of 0.2% from the previous month. Calgary and Edmonton saw more notable increases, with Calgary's benchmark price rising by 0.9% to $577,800 and Edmonton's by 0.5% to $384,700.
Looking ahead, the recent rate cut by the Bank of Canada is expected to stimulate market activity. “That first rate cut is expected to bring some pent-up demand back into the market, and those buyers will find there are more homes to choose from right now than at any other point in almost five years,” said James Mabey, Chair of CREA.
