CREA Cuts Housing Market Forecast Amid Increased Supply Levels
The Canadian Real Estate Association (CREA) has revised its housing market forecast for 2024, citing increased supply levels and a quieter spring market due to fewer expected interest rate cuts.
The association now projects a more gradual rebound in the national housing market, with 472,395 properties expected to change hands this year, representing a 6.1% increase from 2023. This is a significant downward revision from the 10.5% gain forecasted in April.
CREA’s latest data for June shows mixed signals in the housing market. While year-over-year home sales fell 9.4%, there was a 3.7% month-over-month increase. The average home price in June was $696,179, down 1.6% from the previous year but up 0.1% from May, marking the first monthly gain in 11 months.
Shaun Cathcart, CREA’s senior economist, noted that while June’s performance wasn’t exceptional, there was a slight improvement following the Bank of Canada’s recent rate cut. This sentiment was echoed by TD economist Rishi Sondhi, who suggested the data could indicate improved activity ahead, albeit limited by ongoing affordability challenges.
CREA has also lowered its forecast for the average home price increase in 2024 to 2.5%, down from the previous 4.9% projection. This adjustment comes as the Bank of Canada initiated its rate-lowering process, reducing its key interest rate to 4.75% from 5% on June 5.
The supply side shows some improvement, with about 180,000 properties listed for sale across Canada at the end of June, up 26% from the previous year. However, this figure remains below the historical average of around 200,000 for this time of year. New listings saw a 1.5% month-over-month increase in June, primarily driven by activity in the Greater Toronto Area and B.C. Lower Mainland.
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