Bank of Canada rate cut seen revitalizing housing market after 'sleepy' May
The Canadian real estate market showed further signs of sluggishness in May, with the national benchmark home price slipping to $714,300, down 0.2 per cent from April to May 2024, and 2.4 per cent year over year. Despite this, the Canadian Real Estate Association (CREA) remains optimistic, expecting the recent rate cut by the Bank of Canada to inject new life into the market.
“May was another sleepy month for housing activity in Canada, although it may prove to be the last of those now that interest rates have moved lower,” CREA’s senior economist Shaun Cathcart said in Monday’s report. Cathcart believes the central bank’s rate cut to 4.75 per cent on June 5 will have a significant psychological impact on potential buyers.
“The question now turns to further rate cuts — specifically, how fast, and how far?” Cathcart said.
Home sales across Canadian MLS systems dipped 0.6 per cent month over month in May, maintaining a level slightly below the ten-year average. The dip occurred despite a 0.5 per cent increase in new listings, suggesting that the market remained relatively stagnant.
On a year over year basis, home sales dropped by 5.9 per cent nationwide. Greater Vancouver declined by 19.8 per cent, while Greater Toronto experienced a decrease of 22.2 per cent. In total, 18 out of the 26 regions monitored by CREA reported a decrease in sales compared to the previous year.
Robert Kavcic, a senior economist at BMO, noted the market’s response to the interest rate cut, saying, “The Bank of Canada finally cut interest rates, and the housing market response has been more listings, not sales. Hands up if that was on your bingo card.”
The number of properties listed for sale surged by 28.4 per cent compared to the previous year,
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