‘We are in a bit of a lull.’ Canada’s housing market ramping up slowly despite rate cuts

The real estate market has been in a holding pattern since last fall, but will likely pick up by next spring, according to a new report by the Canadian Real Estate Association (CREA).
“Everyone’s looking for how this housing market is going to finally spring back to life with rates finally coming down now,” said Shaun Cathcart, senior economist at the CREA. But the market has yet to react, he added. “The bigger picture is that everything’s been in a holding pattern since last fall.”
There are “fledgling signs” that the market is picking up: conditions are stabilizing, sales are up, and prices are not falling, he said.
Next year, there’ll be an “explosion of activity” in the market if interest rates come down as predicted, he said. But for now, it’s still too early to see the kind of bounce-back that people are expecting.
CREA says the number of homes sold in August fell 2.1 per cent compared with the same month last year, while the national average sale price for August was $649,100, a 0.1 per cent increase compared with a year earlier.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July, while the number of newly listed properties was up 1.1 per cent month-over-month.
Rate cuts “failed to breathe much life into Canada’s retail housing market,” said Michael Davenport, economist at Oxford Economics Canada.
“We are in a bit of a lull,” he said. “We’re not expecting a sort of rapid acceleration in housing activity or housing prices by any means.”
Buyers did not “leap from the sidelines” when interest rates began to fall, said Karen Yolevski, COO at Royal Lepage.
The market will pick up, but it won’t be a “hockey stick” ramp-up but rather a “slow and steady climb,” said Yolevski.
Buyers are holding out for further rate decreases, but they might not want to wait too long, said Cathcart.
As interest rates fall, prices could climb. “You’re likely to get a better selection of interest rates six months from now than you would today,” he added. “On the other hand, you also have to keep your eye on prices; if they start to climb again, that could be offsetting your better interest rate.”
We will need to wait and see how things play out, said Cathcart.
With files from the Canadian Press.