Housing market ‘rebounded’ in July, CREA says, but prices could soon spike

The latest numbers from the Canadian Real Estate Association suggest the housing market is in a relatively 'stable' period, but it may not last long, according to experts.

The Canadian housing market warmed up in July, and not just from the weather.

Total home sales across Canada increased 3.8 per cent compared with the previous month, and marked the fourth straight monthly increase, according to the latest data from the Canadian Real Estate Association (CREA).

More listings are also expected to be added to the market by the fall and prices are rising at a slower pace than sales growth. Although this may seem like good news for buyers right now, industry experts believe it may not last long as demand is expected to catch up with available supply by next year.

At least one economist believes the situation is heading more towards a seller’s market, and prices could soon spike — potentially locking many would-be homebuyers out of options.

“It looks like the ‘rebound’ is underway and it’ll be interesting to see what happens now that supply has also turned a corner and is falling again. So markets are tightening up,” senior economist Shaun Cathcart at the CREA says in an interview with Global News.

“Home prices have been rising, but are still stable at the national level. I think we may see (price) gains creep in as early as this fall.”

Interest rates had long dominated conversations around the housing market in Canada, after borrowing costs were increased gradually by the Bank of Canada starting in 2022 to combat spiking inflation — including in the form of a red-hot housing market.

After rates started coming down to a more “neutral level, meaning high enough to maintain price stability while still allowing for the economy to expand, it was expected that home sales would start to increase as more buyers could qualify for mortgages.