(Montreal) The Canadian Real Estate Association (CREA) on Friday revised down its forecast for home sales for this year and next, as fewer buyers are entering the market.
The association expects 464,239 properties to change hands this year, down 6.8% from last year. It also now projects that 516,043 properties will be sold in 2024.
In its April forecast, CREA said it expected 492,674 properties to be sold this year, down 1.1% from 2022. It then projected a total of 561,090 homes would be sold in 2024.
While the association says it has seen a rebound in sales in most parts of the country, interest rate hikes continue to weigh on borrowing costs and buyer sentiment.
ACI further finds that markets are still hampered by a lack of supply, although prices do not suffer as much as sales.
It now forecasts the national average home price to fall 0.2% from 2022 to $702,409 this year, before climbing to $723,243 in 2024.
In its April forecast, it mentioned an average price of $670,389 for this year and $702,200 for 2024.
One of the biggest factors weighing on prices is new listings for sale, which in many markets remain below pre-pandemic levels.
“The number of new listings is now catching up with sales, but this development should not result in further significant increases in sales. Indeed, some buyers are likely to retreat, as they did in 2022, to wait for further signs from the Bank of Canada and what data it is basing its policy on,” CREA explained on Friday. in a press release.
“Longer term, there is also a growing consensus that rates will not only be higher, but will likely stay higher for longer, into 2024.”
CREA’s forecast was released alongside its June home sales data, which showed transactions up 1.5% from at least May, on a seasonally adjusted basis, for amount to 40,449.
The actual number of sales was 50,155 in June, an increase of 4.7% compared to the same month last year.
Additionally, the average price reached $709,218, which was up 6.7% from June 2023. On a seasonally adjusted basis, it was $709,103, down 0.7% from June 2023. the previous year.
New listings were down 11.1% from a year ago to 84,749, but up 5.9% on a seasonally adjusted basis from the previous month to 63,571.
“Housing markets appear to be stabilizing heading into summer after a rocky year,” CREA President Larry Cerqua said in a statement.
“Most importantly, the increase in new listings over the past few months will give buyers more choice and should slow price increases in the second half of the year. »
Economist Shelly Kaushik of BMO Capital Markets saw the June numbers as proof that the market was continuing to rally and had ignored the Bank of Canada’s June rate hike.
“A single rate hike was not enough to calm market psychology in June,” she wrote in a note to investors.
His view was supported by the fact that the country recorded its fifth consecutive monthly increase in sales, with activity levels firmly in the pre-pandemic range.
However, she noted that the national sales data masked some regional differences, including a 6.9% decline in home sales in the Greater Toronto Area, which was more than offset by gains in British Columbia and Alberta.
Going forward, Kaushik expects activity to “take a breather in the coming months after (what we believe to be) the bank’s latest hike” this week.
“The bank is expected to remain on hold for the rest of the year, but (we) will be watching closely to see how well the housing recovery feeds into broader inflation measures. »