GTA home sales fell in July, despite interest rate cuts: CREA

August 16, 2024 Canuck

A new report from the Canadian Real Estate Association says successive Bank of Canada interest rate cuts have yet to spur housing sales in the Greater Toronto Area, but rising inventory and further rate cuts are expected to spark more market activity this fall.

The report, released Thursday by the Canadian Real Estate Association, says monthly home sales fell 0.7 per cent nationally from June to July, even as the cost of borrowing has gone down. However, sales are up 4.8 per cent from this time last year, the report found.

Royal LePage CEO Phil Soper says the market remains stable despite the lack of movement.

“People aren’t willing to sell their homes for less than their perceived value, and that relates directly to the housing shortage that we have in the country,” Soper said. “But the activity levels, the number of homes trading hands, remain well below normal.”

The average home price in Canada was $667,317 in July, a 0.2 per cent drop from this time last year.

Soper says housing inventory is rising and further Bank of Canada rate cuts are expected in the fall. That should increase sales and return some balance to the market, he said.

Some areas, including Hamilton-Burlington, did have an increase in month-over-month home sales in July. But the report found sales in the GTA, one of Canada’s most expensive markets, declined last month.

Soper says first-time buyers are looking to more affordable markets right now, but he expects activity in southern Ontario to bounce back as borrowing becomes cheaper.

Southern Ontario sellers waiting out slow summer

Grant Desjardine, a real estate broker in Oshawa, says rate cuts haven’t helped move houses in the Durham region either.

Desjardine said he has five listings on the market now, all of which are struggling to attract buyers, marking a shift from the COVID-19 pandemic years when sellers mostly held the advantage. Despite that, he said his sellers aren’t panicking.

“Buyers, with more options, are being a little bit more choosy, taking their time, seeing what’s on the market,” Desjardine said. “We’re hoping that come September, October, once we get through the summer months here, that buyers will come off the fence.”

This summer, the Bank of Canada cut its key interest rate for the first time since 2020. Cuts on June 5 and July 24 brought the rate down from five per cent to 4.5 per cent. That should make it easier for first-time home buyers to borrow money and enter the market, the CREA report says.

WATCH | Toronto Real Estate Board analyst on interest rate cuts and the housing market:

How will the Bank of Canada’s interest rate cut affect the housing market?

2 months ago

Duration 7:04

Jason Mercer, chief market analyst for the Toronto Regional Real Estate Board, tells Power & Politics that as interest rates head down, ‘people that were really hampered from an affordability perspective’ will start to return to the housing market. Moving forward, however, he said he expects lower interest rates to lead to ‘upward pressure on home prices.’

The CREA reported month-over-month home sales went up 3.7 per cent nationally in June, when the bank announced its first interest rate cut.

The number of listings in Canada is also up nearly 23 per cent compared to this time last year, though still 10 per cent below historical averages, according to the report. The number of newly listed properties increased 0.9 per cent month-over-month nationally.

“At this point, many markets have a healthier amount of choice for buyers than has been the case in recent years,” CREA chair James Mabey said in the report. “The stage is increasingly being set for the return of a more active housing market.”

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