The Canadian housing market saw a modest increase in home sales in June, according to the latest report from the Canadian Real Estate Association (CREA).

Home sales in Canada rose by 3.7% in June compared to May, potentially driven in part by the Bank of Canada's interest rate cut at the beginning of the month. Despite the increase, overall activity remains 9.4% below the levels seen in June.

“It wasn’t a ‘blow the doors off’ month by any means, but Canada’s housing numbers did perk up a bit on a month-over-month basis in June following the first Bank of Canada rate cut,” noted Shaun Cathcart, CREA’s senior economist. “Year-over-year comparisons don’t look great mainly because of how many buyers were still jumping into the market last spring, but that’s a story about last year.”

The rise in sales activity has had some impact on inventory levels, with CREA’s months of inventory measure falling to 4.2 months from a revised 4.3 months in May. This measure indicates how long it would take to sell all current listings at the current sales pace, with a decrease suggesting a tightening market.

In terms of prices, the average non-seasonally adjusted national selling price in June was $696,179, which is down 1.6% compared to the same month last year. The MLS Home Price Index (HPI), which adjusts for seasonality and property type differences, edged up by 0.1% month-over-month, but remains 3.4% lower than last year’s levels.

What the second half of the year may have in store

Looking ahead, the second half of 2024 is expected to see a slow and gradual return of buyers into the housing market, according to CREA chair James Mabey.

“Those buyers will face a considerably different shopping experience depending on where they are in Canada,” he added, “from multiple offers in places like Calgary, to the most inventory to choose from in over a decade in places like Toronto.”

As of the end of June, there were about 180,000 properties listed for sale on all Canadian MLS systems. While this is a 26% increase from a year earlier, it remains below the historical average of around 200,000 for this time of the year.

TD economist Rishi Sondhi adds that the month-over-month increase in average selling prices “could be a harbinger of improved activity ahead.”

“Indeed, we think that markets will be stronger in the back half of the year, as the economy holds up and more meaningful interest rate relief is delivered,” he wrote. “However, stretched affordability conditions will likely limit the degree of improvement.”