The Canadian Real Estate Association (CREA) downgraded its resale housing market forecast on Friday in anticipation of interest rates remaining high "well into 2024."
Despite a continuing upswing in home sales across Canada, month-over-month gains appear to be losing steam as rising interest rates bring uncertainty to the housing market. New listings are starting to catch up with sales, but more would-be buyers are moving to the sidelines as they wait and see what the Bank of Canada will do next.
With these market conditions at play, CREA is now projecting 464,239 home sales across the country this year -- a 6.8% drop from 2022 and down by nearly 30,000 from the sales predicted by the association in its April forecast. Every province except for British Columbia is expected to see a drop in sales this year, with Atlantic Canada to be hit the hardest.
Sales in Newfoundland, Nova Scotia, and New Brunswick are expected to fall 15.1%, 14.4%, and 13.9%, respectively. Alberta sales will follow closely, falling 13%, with Quebec just behind at an 11.4% loss. Ontario is expected to see sales dip by just 3.9%.
CREA's forecast for 2024 also took a hit, with the association now anticipating 516,072 sales for the year, down from the 561,090 projected in April's forecast. Despite the drop, the newly predicted figure is still 11.2% above 2023's anticipated sales and is in line with the 10-year average, CREA notes.
Every province is expected to see a jump in sales in 2024, with Ontario and British Columbia leading the way with 13.3% and 12.9% gains, respectively.
In terms of home values, CREA is now anticipating a higher national average price for 2023 than it had in April, with its new prediction of $702,409 down just 0.2% from 2022's average. This change, CREA says, is "owing both to compositional gains from additional sales in the pricey regions of British Columbia’s Lower Mainland and the Greater Toronto Area, plus stronger than expected price growth across the country in the second quarter of 2023."
In 2024, CREA expects the average home price to jump 3% to $723,243, with every province seeing relatively modest single-percentage-point gains.
"This is only close to where it was in the second quarter of 2023," the report reads. "So the forecast, in general, is for prices to mostly stabilize until interest rates start to come down."