Despite rate cuts, home sales stuck in ‘holding pattern’ over summer: CREA

Home sales rose again in August but the national housing market was not shocked to life by the start of the Bank of Canada's interest rate easing cycle, according to CREA.

A summer start to interest rate cuts from the Bank of Canada failed to breathe new life into the Canadian housing market, with the national real estate association suggesting homebuyers are content to wait for cheaper borrowing costs before getting off the sidelines.

The Canadian Real Estate Association (CREA) said Monday that home sales were up 1.3 per cent in August from July, the highest level since the start of the year.

But activity levels are still 2.1 per cent below the same month last year. Sales remain muted under the weight of still-elevated interest rates.

“Despite some fledgling signs of life to kick off the long-awaited monetary policy easing cycle, Canadian housing market activity still looks to be stuck in the same holding pattern it’s been in all year,” said Shaun Cathcart, CREA senior economist, in a statement Monday.

The Bank of Canada kicked off its rate-cut cycle in June, following up with consecutive drops in July and September. Many economists expect the easing cycle will continue through much of 2025.

Despite the early rate cuts, there hasn’t been a flood of demand bringing prospective buyers back into the market.

Cathcart said it “makes sense” that households are continuing to wait for lower rates and cheaper mortgages. Prices are “still well behaved in most of the country,” he said, putting no rush on buyers to try to get a deal.

On a non-seasonally adjusted basis, CREA said the national average home sale price last month was $649,100, just a 10th of a percentage point higher than August 2023.