While May remained relatively uneventful for most Canadian housing markets, the Canadian Real Estate Association (CREA) expects the Bank of Canada’s recent rate cut to bolster activity moving forward.

Per CREA data, home sales activity recorded over Canadian MLS Systems dropped 0.6% between April and May 2024 – only slightly lower than the 10-year average. Actual (not seasonally adjusted) monthly activity came in 5.9% below the same time last year.

“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,” Shaun Cathcart, CREA’s senior economist said.

“The Bank of Canada’s June 5 rate cut may have only been 25 basis points, but the psychological effect for many who have been sitting on the sidelines was no doubt huge. The question now turns to further rate cuts – specifically, how fast, and how far?”

Home prices dipped slightly in May, with the average MLS Home Price Index (HPI) falling 0.2% month-over-month and 1.4% year-over-year. The actual (not seasonally adjusted) national average sale price was $699,117 in May – a drop of 4% year-over-year.

The number of newly listed homes also increased slightly in May, inching up by 0.5% month-over-month. By the end of May, there were approximately 175,000 properties listed for sale on all Canadian MLS Systems.

With sales down and new listings up, the national sales-to-new listings ratio eased to 52.6%, which falls within the criteria for a balanced housing market.

“The spring housing market usually starts before all the snow has melted, somewhere around the beginning of April, but this year I believe a lot of people were waiting for the Bank of Canada to wave the green flag,” James Mabey, chair of CREA said.

“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.”

CREA : Rate Cuts Expected to Bolster Market Activity After A Sleepy May by Cassie Apperloo | Livabl