Home sales and prices edging up as housing market 'could get interesting,' reports say

The housing market could soon get "interesting," economists say, as home prices and sales start to edge up,according to apair of newreports released Friday.

In its latest quarterly Home Price Update and Market Forecast, Royal LePage is forecasting that the aggregate price of a home in Canada will increase nine per cent in the fourth quarter of 2024, compared to the same period last year.

At the same time, theCanadian Real Estate Association (CREA) said home sales activity recorded over its listings dataedged up 0.5 per centbetween February and March 2024, holding around 10 per centbelow an average of the last 10 years.

But CREA added that weeklytracking showed "a bounce in new supply" around the second week of March, leadingto a burst of sales and a jump in listings in the first week of April.

"We'll have to wait for the April data to really understand how buyers are responding to all these new properties for sale, but if you look at last spring as a guide and add to that record population growth in the last year and a central bank that is far more likely to cut this summer than raise like it did last year, it could get interesting," said Shaun Cathcart, CREA's senior economist, in a newsrelease.

"Will the story be high interest rates keeping a lot of people on the sidelines this year, or the much expected and anticipated first rate cuts enticing a lot of people back into the market? Probably a bit of both."

Toronto to outpace Vancouver

Royal LePagealsosaid itexpects that home prices in theGreater Toronto Areawill surpass those inGreater Vancouverin 2024.

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Bank of Canada wont speculate about cutting interest rates

5 months ago

Duration 2:09

The Bank of Canada is holding its key interest rate at 5 per cent, saying it needs to see sustained slowing of inflation before it will cut the rate. It is not ruling out a June cut.

The aggregate price of a home inToronto isforecastto increase 10 per cent year over year. In Montreal, it's expected to increase 8.5 per cent year over year.Royal LePage calculates the aggregate priceusing a weighted average of the median values of all housing types collected.

Those rates will outpaceprice gains inCalgary, "which was previously expected to see the greatest increase in home values this year," the report notes.

Calgaryis still the strongest larger market in Canada, with all itslistingsclearing within the month and prices now up 11 per cent year over year, wroteRobert Kavcic, senior economist with BMO, in a note.

"VancouverandTorontoremain largely balanced (stronger conditions in single-detached versus condos)," he wrote."Montreal'smarket is nudging into sellers' territory; and much ofAtlantic Canadais still firm. Most of the softness remains concentrated aroundSouthern Ontario."

Eyes on the central bank

On Wednesday, the Bank of Canadaheld its key interest rate at five per cent for the sixth consecutive time since July but left the door open for arate cut in June.

It's"within the realm of possibilities," Bank of Canada governor Tiff Macklem said during a newsconference following the announcement.

Kavcicnotes there are a "few interesting measures of market psychology" playing out withthe expectation thatrate-cuts are coming. This includes anuptick invariable-rate mortgages up to 20 per cent in the most recent two months of available data, he said.

"Fewer and fewer want to lock in with rate cuts presumably looming, and/or they're discounting improved affordability ahead,"Kavcicsaid.

"Let's just say that if the BoCdoesn'tcut rates soon, many in the real estate market are going to be seriously disappointed."

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