Forecast for home prices, sales scaled back after slow spring: CREA

globalnews.ca:

Despite hope for lower interest rates in the months ahead, the Canadian Real Estate Association is scaling back expectations for home sales and prices after a slower-than-usual spring season.

CREA released an updated housing outlook on Friday that saw it revise down forecasts for both 2024 and 2025.

The organization now expected some 472,395 properties to change hands this year, a bump of 6.1 per cent from last year’s figures but below the anticipated 492,083 sales it called for in its previous forecast from April.

Home prices will end up at an average of $694,393 nationally, CREA said, an annual gain of 2.5 per cent. The organization’s earlier forecasts called for 4.9 per cent growth to an average price of $710,468.

CREA sees more recovery in the housing market in 2025 as interest rates are expected to decline, with 501,902 sales and an average price of $729,319. That’s also down from April’s expectations for 530,494 sales and an average price of $760,120 next year.

What’s changed from April to July is reduced optimism for the pace of interest rate easing from the Bank of Canada, which delivered its first rate cut of the cycle in June. Tiff Macklem, the governor of the central bank, has said that Canadians can expect a “gradual” pace of rate cuts going forward compared with the rapid rate hike cycle over the past two years.

Supply in the housing market has also built up as sellers come off the sidelines, CREA noted, but buyers remained hesitant through the spring.

“While lower interest rates are still expected to gradually bring buyers back into the market going forward, a slow spring market this year along with growing levels of supply has resulted in a downward revision to the forecast for both sales and average home