In April, Canada saw a significant rise in the number of houses for sale, signaling a calmer housing market. BMO’s chief economist, Douglas Porter, suggests that this trend could increase the likelihood of a Bank of Canada rate cut.
According to the latest data from the Canadian Real Estate Association (CREA), new listings grew by 2.8% from March to April, while seasonally adjusted sales fell by 1.7%. This combination resulted in a 6.5% increase in total home listings.
Porter highlights that sales declines in major cities like Montreal, Toronto, Calgary, Ottawa, and Halifax have led to a 1.8% drop in prices compared to April 2023. This reduced buyer activity has helped maintain price stability, which is beneficial given the high unaffordability in the housing market.
The market's current stability suggests that future interest rate cuts by the Bank of Canada are less likely to trigger a spike in housing prices. Cooler prices and increased listings slightly enhance the prospects for rate relief in the coming months.
However, concerns about housing affordability persist. Housing starts this year are projected to struggle to reach last year’s 240,000 mark, which is only half of the federal budget target for 2024. Moreover, most new housing starts are multi-unit buildings, which take longer to complete, indicating that new supply won't alleviate affordability issues soon.
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