Canadian Housing Market Outlook Downgraded Again

The Canadian Real Estate Association (CREA) has lowered its housing market forecast for the remainder of the year.

Despite consecutive interest rate cuts by the Bank of Canada in recent months, the market has remained in a holding pattern and the association expects it to remain so until next spring.

However, with the central bank having cut its overnight lending rate by another 50 basis points on Oct. 23, to 3.75% from 4.25% — for a total 1.25% reduction since it first began easing interest rates in June — and many economists expecting there to be no slowdown in order to stimulate the economy, CREA is predicting a sharp market rebound beginning in the second quarter of 2025.

CREA’s previous forecast assumed a gradual return of buyers into the market starting with the first interest rate cuts this summer. It muses that the type of buyer who was, until recently, entering the market with a three-year fixed rate mortgage has decided to hold off for better rates that now seem just around the corner.

Some 468,900 residential properties are predicted to trade hands via Canadian MLS systems by the end of 2024, a 5.2% increase from 2023.

National home sales are forecast to climb a further 6.6% to 499,800 units in 2025, as interest rates continue to decline and demand flows back off the sidelines.

The national average home price is expected to edge up 0.9% on an annual basis to $683,200 in 2024, and by 4.4% to $713,375 in 2025.

Prices at the national level have remained mostly flat since the beginning of the year.