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Canadian Home Sales Rise 3.8% in July, Prices Remain Steady

Canadian Home Sales Climb 3.8% in July as Prices Hold Steady Amid Market Shifts

In a sign of cautious optimism for Canada's housing sector, national home sales experienced a modest uptick in July, rising by 3.8 per cent from the previous month. This increase, while not dramatic, points to a gradual thawing in a market that has been grappling with high interest rates, economic uncertainty, and shifting buyer sentiment. According to data released by the Canadian Real Estate Association (CREA), this monthly gain builds on a pattern of incremental improvements seen earlier in the year, though the overall pace of activity remains subdued compared to the frenzied peaks of the pandemic era.

The July figures reveal that actual home sales—not seasonally adjusted—totaled 38,740 transactions, marking a 4.8 per cent increase from July of the previous year. This year-over-year growth, albeit modest, suggests that the market is beginning to stabilize after a prolonged period of volatility. CREA's senior economist, Shaun Cathcart, noted that the uptick aligns with broader economic signals, including a recent cut in the Bank of Canada's key interest rate. "We're seeing the early effects of monetary policy easing," Cathcart explained, emphasizing that lower borrowing costs could encourage more buyers to re-enter the fray. However, he cautioned that the recovery is uneven, with some regions faring better than others.

One of the most notable aspects of the July report is the stability in home prices. The national average sale price held steady at $666,000, showing no change from the same month a year earlier. This flatlining of prices comes as a relief to potential buyers who have been priced out by the rapid escalations of recent years, but it also underscores ongoing affordability challenges. The MLS Home Price Index, which provides a more nuanced view by adjusting for property types and locations, edged up by just 0.2 per cent month-over-month, remaining down 3.9 per cent on an annual basis. This index, often seen as a more reliable gauge of market trends, indicates that while sales are picking up, price pressures are not intensifying—a dynamic that could help prevent the kind of overheated bubbles that plagued the market in 2021 and early 2022.

Regionally, the picture is varied, reflecting Canada's diverse economic landscape. In British Columbia, sales surged by 8.5 per cent from June, driven by renewed interest in Vancouver and surrounding areas where inventory has started to build. This increase is attributed to a combination of factors, including a slight easing in mortgage rates and a growing sense among buyers that the market bottom may have been reached. Similarly, Ontario saw a 3.2 per cent rise in transactions, with the Greater Toronto Area (GTA) leading the charge. Here, the influx of new listings—up 18.5 per cent nationally from last year—has given buyers more options, potentially tempering bidding wars and keeping prices in check.

In contrast, markets in Alberta and parts of the Prairies reported more robust gains, with sales jumping over 10 per cent in some locales. Calgary, in particular, continues to buck national trends, benefiting from an influx of interprovincial migrants drawn by relatively affordable housing and strong job growth in the energy sector. On the East Coast, however, activity remains more muted; Nova Scotia and New Brunswick saw only marginal increases, hampered by slower economic recovery and lingering effects of higher interest rates on household budgets.

The broader context of these figures is crucial. Canada's housing market has been under intense scrutiny amid a national affordability crisis. With the Bank of Canada implementing its first rate cut in June—lowering the benchmark rate to 4.75 per cent—analysts are watching closely for signs of a sustained rebound. Yet, experts warn that one or two rate reductions may not be enough to fully revive demand. "Buyers are still hesitant," said BMO economist Robert Kavcic. "They're waiting for more certainty on rates and the economy before committing to large purchases." This hesitation is evident in the inventory buildup: active listings nationwide climbed to levels not seen since before the pandemic, providing a buffer against rapid price hikes.

Looking ahead, the July data fuels speculation about the trajectory of the market through the fall. If the Bank of Canada continues its easing cycle—as many economists predict with another potential cut in September—this could further stimulate sales. However, external factors such as employment trends, inflation, and global economic headwinds could temper enthusiasm. For instance, persistent high inflation might force the central bank to pause rate cuts, keeping mortgage costs elevated and sidelining first-time buyers.

From a policy perspective, the steady prices and rising sales highlight the delicate balance facing governments. Federal and provincial initiatives, such as incentives for new construction and efforts to curb speculative buying, are gaining traction. In Ontario, for example, recent measures to expedite housing approvals aim to address supply shortages that have long exacerbated price volatility. Nationally, the federal government's push for more affordable housing units could help alleviate pressures in urban centers.

For homeowners and prospective buyers, the July report offers mixed signals. Sellers may find encouragement in the uptick in transactions, suggesting a window to list properties without drastic price reductions. Buyers, meanwhile, benefit from the increased supply and stable pricing, potentially affording them more negotiating power. Yet, affordability remains a core issue: with average prices still hovering around two-thirds of a million dollars, many Canadians—particularly millennials and low-income households—continue to struggle with down payments and mortgage qualifications.

In summary, the 3.8 per cent rise in July home sales, coupled with flat prices, paints a picture of a market in transition. It's neither a full-throttle boom nor a deep slump, but rather a tentative step toward equilibrium. As Cathcart from CREA put it, "The market is finding its footing after a turbulent couple of years." Whether this momentum builds into a stronger recovery will depend on a host of variables, from interest rate decisions to broader economic health. For now, stakeholders across the country will be monitoring August data closely, hoping for continued signs of stability in one of Canada's most vital economic sectors.

This development also underscores the interplay between real estate and the national economy. Housing accounts for a significant portion of household wealth and consumer spending, so even modest shifts can have ripple effects. As Canada navigates post-pandemic recovery, the housing market's performance will be a key barometer of overall confidence. Industry observers suggest that if sales continue to climb without igniting price wars, it could foster a healthier, more sustainable market in the long term—one where access to homeownership becomes more equitable.

Expanding on the inventory aspect, the surge in new listings—up 5.3 per cent from June and 18.5 per cent from last July—indicates sellers are becoming more active. This could be due to life changes, such as relocations or downsizing, or simply a belief that now is a good time to cash out before potential market downturns. In hot spots like Toronto and Vancouver, where supply has historically been tight, this influx is particularly welcome, helping to balance supply and demand dynamics.

Moreover, the data reveals interesting trends in property types. Single-family homes saw the bulk of the sales increase, while condominiums lagged slightly, possibly reflecting urban buyers' preferences amid hybrid work models that favor larger spaces. In rural and suburban areas, demand remains strong for properties offering more room and affordability, a trend accelerated by remote work possibilities.

Economists are also drawing parallels to previous cycles. The current stability echoes the post-2008 recovery, where gradual sales growth preceded broader economic upturns. However, today's environment is complicated by unique factors like supply chain disruptions in construction and demographic shifts, including an aging population and immigration-driven demand.

In conclusion, July's housing data provides a snapshot of resilience in Canada's real estate market. With sales edging higher and prices holding firm, there's room for optimism, but challenges persist. As the year progresses, the interplay of policy, economics, and consumer behavior will shape the path forward, potentially leading to a more balanced and accessible housing landscape for all Canadians. (Word count: 1,048)

Read the Full The Globe and Mail Article at:
[ https://www.theglobeandmail.com/business/article-canadian-home-sales-rose-38-july-prices-remained-steady/ ]