Home Sales Tick Up in August as Interest Rates Fall

National home sales inched up 1.3 per cent in August, reaching their highest level since January, but are still lower than what they were last year, according to the latest data from the Canadian Real Estate Association (CREA)

Home sales were down 2.1 per cent compared to August 2023 and experts say a significant resurgence in housing activity remains to be seen — at least until interest rates drop further.

“Despite some fledgling signs of life to kick off the long-awaited monetary policy easing cycle, Canadian housing market activity still looks to be stuck in the same holding pattern it’s been in all year,” CREA’s senior economist Shaun Cathcart said in the Sep.16 report.

“That said, with ever more friendly interest rates now all but guaranteed later this year and into 2025, it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”

The Bank of Canada has made three consecutive cuts to its policy interest rate, with a quarter-point cut to 4.25 per cent announced in September and more expected to follow.

“It’s hard to pin exactly what rate level would wake the market up, since it will also depend on prevailing economic and job market conditions,” Robert Kavcic, a senior economist at Bank of Montreal, said in a note. “But, if/when we see mortgage rates crack below 4 per cent, things could start to get more compelling from an affordability and investment perspective.”