After a supply surge allowed for relatively high sales activity in October and November, Canadian home sales "dipped" in December, according to the Canadian Real Estate Association's (CREA) final statistics package of 2024. Still, we're doing better than we once were.
Month over month, overall national homes sales fell by 5.8% from November to December, but compared to activity levels in May, i.e. pre-rate cuts, December sales were 13% higher. And on a not-seasonally-adjusted basis, home sales were actually up 19% compared to December 2023.
Zooming further out, the fourth quarter of 2024 was one compared to the quarters of the last 20 years (excluding the COVID19 peak), with sales 13% higher than they were in the third quarter. As for the coming year, CREA is confident the strong demand that drove sales in the fall will pick up again and continue through spring 2025.
“The number of homes sold across Canada declined in December compared to a stronger October and November, although that was likely more of a supply story than a demand story,” said Shaun Cathcart, CREA’s Senior Economist. “Our forecast continues to be for a significant unleashing of demand in the spring of 2025, with the expected bottom for interest rates coinciding with sellers listing properties for sale in big numbers once the snow melts.”
As Cathcart highlights, listings fell by 1.7% between November and December from just over 160,000 active listings to 128,000 at the end of December. This represents the third consecutive month listings have fallen sing the September surge, landing us 7.8% up from a year earlier but still below the long-term average of around 150,000 listings.
This also puts the new sales-to-new listings ratio at 56.9% — down from the 17-month high of 59.3% in November and closer to the long-term average and ideal balanced market ratio of 55%.
On the national inventory front, 2024 ended closer to a sellers' market than buyers' with 3.9 months of inventory, up from a 15-month low of 3.6 months in November but still "well below" the long-term average of five months of inventory.
Prices were also on the rise in December, with the last month of 2024 posting a 0.3% month-over-month increase in the National Home Price Index and a 2.5%year-over-year uptick in the the non-seasonally adjusted national average home price to $676,640. At the same time, the non-seasonally adjusted National Home Price Index was down 0.2% from December 2023, though this represents the smallest annual decrease since last April.
Looking forward, CREA says demand will continue to drive sales in the coming years in an update to their Resale Housing Market Forecast for 2025 and 2026.
"The assumption remains that the combination of two and a half years of pent-up demand and lower borrowing costs, together with the usual burst of spring listings will lead to a rebound in market activity across the country in 2025," say the report. "In addition to lower mortgage rates, the expectation the Bank of Canada may soon signal that interest rates are about as low as they are likely to go in this easing cycle could spur even more demand from those who have been waiting for the right time to lock in a fixed-rate mortgage."
The projection remains very similar to CREA's fall outlook statement, but now contains the caveat that things could change pending a potential trade war with America. "A significant new downside risk has appeared in the form of a potential major trade war with the United States and the implications this could have on the Canadian economy," says the outlook.
As of now, however, CREA projects 532,704 residential properties will be sold in 2025, up 8.6% from 2024 — a forecast that was revised from a lesser 6.6% increase due to the "surprising strength" of markets in Q4.
Compared to the October outlook, CREA is also now predicting average home prices will rise by 4.7% to $722,221 instead of 4.4%. And looking even further down the line, CREA forecasts 2026 will see home sales jump by 4.5% to 556,662, compared to 2025, and home prices by 3.3% to $746,379.
