The Canadian housing market experienced a modest cooling in May, with home prices and sales activity dipping slightly. This comes ahead of potential further interest rate cuts by the Bank of Canada, leaving many prospective homebuyers and market watchers eager to see June’s data. 
Market Overview: New data from the Canadian Real Estate Association (CREA) indicated a 0.2% month-over-month decrease in the benchmark home price, bringing it to $714,300 in May. Sales activity also saw a marginal decline, dipping by 0.6% compared to the previous month. Despite these drops, the number of newly listed properties on the market increased by 0.5%, offering a slight relief to homebuyers who have been constrained by limited supply.
Expert Insights
CREA’s senior economist, described May as a ‘sleepy’ month for the national housing market. He suggested that May might be the last subdued month for the sales and prices following the Bank of Canada’s recent decision to cut interest rates. The psychological effect (of lower rates) for many, who have been sitting on the sidelines was no doubt huge! This emphasized the potential for a market shift.
Impact of Interest Rate Cuts
The Bank of Canada slashed its benchmark interest rate by 25 basis points on June 5. This move, according to top economists, could be followed by another cut in July – and rates could tumble by as much as a whole basis point by the end of this year. The anticipation of lower rates is likely to influence buyer behaviour and could reinvigorate the market in the coming months.
While May saw a slight cooling in Canada’s housing market, the potential for further interest rate cuts may soon change the landscape. Market participants will be closely monitoring the situation, as lower rates could spur renewed activity and price increases. For now, the market remains in a wait-and-see mode, poised for possible changes in the near future.
Original article: www.mpamag.com
