April expected to See a Steady Growth in Canadian Housing Market
April brought another month of stability to the Canadian housing market, with consistent buyer demand and moderate price growth.
According to the latest figures from the Canadian Real Estate Association (CREA), national home sales experienced a modest increase of 1.7% compared to March of the previous year, totaling 42,633 properties sold. This uptick in sales was only marginally higher, by 0.5%, compared to February’s activity.
The national average home price saw a 2% uptick, reaching $698,520. Meanwhile, the MLS Home Price Index, which measures the typical type of home sold, remained relatively flat, showing a minor increase of 0.7%.
Looking at the broader trend, the supply of new homes continued to grow, with a notable 10% increase year over year, resulting in 76,021 homes hitting the market. However, on a shorter-term basis, there was a slight contraction of -1.6% from February.
The Canadian housing market remains in a balanced state. The national sales-to-new-listings ratio (SNLR) rose to 57.4%, indicating a competitive yet balanced market. Typically, ratios between 45% and 65% suggest balanced conditions, according to the updated guidelines from CREA. Presently, the Canadian housing market leans towards tighter, seller-friendly conditions, although it remains within the balanced range. The long-term average SNLR for this time of year stands at 55%.
In terms of inventory, there were 3.8 months of supply nationally by the end of March 2024, unchanged from the previous month and aligning closely with the long-term average of around five months.
Shaun Cathcart, Senior Economist at CREA, commented on the evolving market dynamics, noting the potential impact of shifting interest rates on buyer behavior. With expectations of a rate cut from the Bank of Canada in the coming months, market sentiment is poised for change.
The anticipation of a rate cut has prompted CREA to adjust its forecast for 2024 and 2025. Interest rates are expected to remain a significant factor influencing housing markets during this period. CREA’s updated forecast predicts a 10.5% increase in home sales for 2024, with 492,083 properties expected to change hands. Additionally, prices are forecasted to rise by 4.9% this year, reaching $710,468, before climbing a further 7% between 2024 and 2025 to $760,120.
Overall, while the housing market continues to demonstrate stability, evolving economic factors such as interest rates are likely to shape its trajectory in the months ahead.
