Canada sees trend end of home price declines after five straight months

Coldwell Banker Mountain Central | Real Estate Professionals Inc.

Home price changes in Canada for the month of February 2024 were flat compared to January 2024.

This represents a notable shift in market conditions, according to the Canadian Real Estate Association (CREA), as home prices have fallen for five consecutive months, including a drop of 1.3% between December 2023 and January 2024. Such sudden shifts are “exceedingly rare.”

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Over the past two decades, there have only been three other times when there has been a sudden improvement or increase in the month-over-month home price percentage change from one month to the next of this size.

“It’s looking like February may end up being the last relatively uneventful month of the year as far as the 2024 housing story goes,” said Shaun Cathcart, the senior economist of CREA, in a statement.

CREA’s statistics are based on the compilation of stats from hundreds of individual real estate boards across the country, such as Victoria Real Estate Board, Greater Vancouver Realtors, Fraser Valley Real Estate Board, Calgary Real Estate Board, Edmonton Real Estate Board, Toronto Regional Real Estate Board, and Greater Montreal Real Estate Board.

“With so much demand having piled up on the sidelines, the story will likely be less about the exact timing of interest rate cuts and more about how many homes come up for sale this year,” continued Cathcart.

The national average home price was $686,000 in February 2024, representing a 3.5% uptick from the same month in 2023.

The number of home sales in February 2024 fell by 3.1% compared to January 2024, following a 12.4% increase in the volume of transactions between December 2023 and January 2024. Compared to the same month in 2023, which was one of the lowest for that month in decades, February 2024 saw a 19.7% increase in the number of home sales.

As for the number of newly listed homes in February 2024, it went up by 1.6% on a month-over-month basis.

As of the end of February 2024, there were 3.8 months of inventory nation-wide.

“After two years of mostly quiet resale housing activity there’s a feeling that things are about to pick up,” said Larry Cerqua, chair of CREA. “At this point, it’s hard to know whether buyers are going to wait for a signal from the Bank of Canada or whether they’re just waiting for the spring listings to hit the market.”

The Bank of Canada held its policy interest rate at 5% in its update announcement earlier this month, but some analysts are predicting the first cut could be as early as this summer, if not by the end of 2024 at the very latest. The first cut would represent the start of a falling cycle that moderates the policy interest rate, with analysts predicting it could take a two-year period of gradual cuts to return the rate closer to the historic average.

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