The housing market “may be interesting” with rising home sales and prices, the report said

The housing market could soon get “exciting,” economists said, as home prices and sales begin to rise, according to new reports released Friday.

In its latest quarterly home price update and market forecast, Royal LePage projects that aggregate Canadian home prices will increase by nine per cent in the fourth quarter of 2024 compared to the same period last year.

Meanwhile, the Canadian Real Estate Association (CREA) said registered home sales activity rose 0.5 per cent between February and March 2024, roughly 10 per cent below the 10-year average.

But CREA's weekly tracking showed “new supply momentum” in the second week of March, leading to an increase in sales and a jump in listings in the first week of April.

“We'll have to wait for April's data to really understand how buyers will respond to these new properties for sale, but if you look at last spring as a guide and add in last year's record population growth and the central bank, it could be interesting to cut this summer rather than raise it like last year.” “said Sean Cathcart, senior economist at CREA.

“Will there be talk of higher interest rates this year that will keep many people on the sidelines, or will the long-awaited and anticipated first rate cut push many people back into the market?” Maybe both are less.''

Toronto overtakes Vancouver

Royal LePage also expects home prices in the Greater Toronto Area to surpass those in Greater Vancouver in 2024.

The aggregate price of a home in Toronto is projected to increase by 10 percent annually. In Montreal, it is expected to increase by 8.5 percent annually. Royal LePage calculates the aggregate price using the average of the median values ​​of all housing types collected.

Those rates outpace price growth in Calgary, “previously expected to see the largest home value increase this year,” the report said.

Calgary is still the strongest major market in Canada, with all listings clearing within a month and prices up 11 percent year-over-year, BMO senior economist Robert Kavcic wrote in a note.

“Vancouver and Toronto remain largely balanced (with stronger single-family homes),” he wrote. “The Montreal market is entering seller territory; and much of Atlantic Canada is still firm. Most of the softness is concentrated around Southern Ontario.”

Eyes on the central bank

The Bank of Canada on Wednesday held its key interest rate at five percent for the sixth straight time since July, but left the door open to a rate cut in June.

It's “within the realm of possibility,” Bank of Canada Governor Tiff Macklem said at a news conference after the announcement.

Cavcic noted that there are “several interesting measures of market psychology” that expect rates to drop. That includes a rise in variable-rate mortgages — up 20 percent in the last two months of available data, he said.

“The decliners are those who want to get lower rates and/or they're discounting improved affordability,” Kavcic said.

“If the BoC, let's say this will not happen A lot of people in the real estate market will be very disappointed if they cut rates soon.”

SEE | Tiff Macklem does not rule out a rate cut in June: