CREA revises forecast, anticipates stronger market fuelled by potential rate cuts
The Canadian Real Estate Association (CREA) has revised its housing market outlook for 2024, now expecting the national average home price to climb 4.9% annually to $710,468 - more than double its previous forecast.
The industry group also increased its prediction for home sales this year, projecting a 10.5% increase to 492,083 transactions, up from a 10.4% rise forecast in January.
“If you look at last spring as a guide and add to that record population growth in the last year and a central bank that is far more likely to cut this summer than raise like it did last year, it could get interesting,” said CREA senior economist Shaun Cathcart in a news release.
Cathcart said the latest data could suggest a potential market revival.
“Will the story be high-interest rates keeping a lot of people on the sidelines this year, or the much expected and anticipated first rate cuts enticing a lot of people back into the market? Probably a bit of both,” he said.
CREA’s revised forecast came as it reported a 1.7% year-over-year increase in home sales in March, with the average price rising 2% to $698,530. On a monthly basis, sales were up 0.5%, while new listings declined 1.6%.
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While inventory levels remain tight with 3.8 months of supply, industry experts like Conrad Zurini, owner of Hamilton-based Re/Max Escarpment Realty, noted that an expectation of lower borrowing costs is driving buyer sentiment.
“Consumers are thinking there’s brighter skies ahead,” Zurini told The Canadian Press. “That rate reduction, no matter when it comes this year, I think consumers are thinking it’ll add fuel to the fire in terms of home prices, and they’ve got to jump in now.”
CREA chair Larry Cerqua noted that while March sales were “quite flat” month-over-month, there were signs of activity ramping up in late March and early April. Zurini’s firm saw showings jump 25% week-over-week to start April.
Looking ahead to 2025, national home sales are expected to increase by 7.8% to 530,494 units as interest rates are predicted to decrease and stabilize at more typical levels. CREA expects the national average home price to grow by 7% from the 2024 figures, reaching an estimated $760,120.
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