National home sales finish strong in 2024, as association forecasts rebound this year

The Canadian Real Estate Association expects home sales to grow 8.6 per cent this year, saying a surprisingly strong fourth quarter in 2024 bodes well for a rebound in most housing markets across the country.

The association forecasts 532,704 residential properties will trade hands in 2025. The outlook represents a boost from CREA’s prediction last fall of a 6.6 per cent national increase in home sales this year.

It also expects the national average home price to rise by 4.7 per cent on an annual basis to $722,221 compared with its earlier forecast of a 4.4 per cent increase.

“The big assumption we have is that there is a record amount of demand out there on the sidelines waiting to come back in, waiting for certain things like lower rates and inventory to be available for them,” CREA senior economist Shaun Cathcart told a news conference in Ottawa on Wednesday.

“We think that a good chunk of that is going to come off the sidelines this year.”

National home sales are forecast climb a further 4.5 per cent in 2026, with average home prices rising by 3.3 per cent to $746,379.

Lower borrowing costs are among the primary factors contributing to the improved outlook, said Cathcart, and the final three months of 2024 provided a preview of the trends that could spill over into the new year.

The association said home sales rose 10 per cent in the fourth quarter of 2024 compared with the previous three months, marking one of the busiest quarters in the last 20 years, aside from the pandemic.

Cathcart said the association expects interest rates to bottom out by spring and sellers to list properties in big numbers by then.

“The point at which interest rates are going to really bring buyers back, and that’s part of our forecast, is when they stop falling,” he said.

“Because as long as they’re still falling, people are going to wait.”

The Bank of Canada’s policy rate stands at 3.25 per cent, with its next decision to be announced Jan. 29.

CREA said B.C. and Ontario, Canada’s two most expensive provinces for housing, are expected to see bigger sales rebounds this year along with larger inventories, but lower-scale price gains.

Meanwhile, It expects increased demand to influence price increases more significantly in Alberta and Saskatchewan, where sales were already near record levels in 2024 and inventories are near 20-year lows.

“This is actually a very conservative forecast right now, and it’s conservative for the reason that there’s a lot of risks out there,” Cathcart said.

He called a potential trade war with the U.S. the “elephant in the room” that could damage Canada’s economy, pushing sales down. He said that uncertainty could be a “huge housing market killer.”

“If you’re not sure about your employment next year, you’re not going to go out and sign a contract for 25 years and borrow $500,000,” Cathcart said.

In its report for December, CREA said 27,643 homes changed hands for the final month of 2024 compared with 23,190 in December 2023, marking a 19.2 per cent increase. That followed a 26 per cent year-over-year rise in November and a 30 per cent increase of sales in October.

On a seasonally adjusted month-over-month basis, Canadian home sales in December fell 5.8 per cent from November, but remained 13 per cent above where they were in May, just before the Bank of Canada’s first of five interest rate cuts last year.

The national average sale price for December rose 2.5 per cent compared with a year earlier to $676,640.

Tim Hill, a real estate agent with Re/Max All Points Realty in Vancouver, said it was a strong finish to the year.

“We saw some resilience in our numbers and we saw more people starting to come back into the market,” Hill said. “We’ve also seen a ton of people talking about moving again, so I think the mindset is starting to shift.”

TD economist Rishi Sondhi called December a “subdued month” in terms of activity, but cautioned that it tends to be a low volume sales month.

He said housing markets in Ontario and B.C. likely still have “significant pent-up demand” and a relatively high share of homes that will benefit from federal mortgage rule changes.

“Our baseline expects a solid gain in Canadian home sales and average home prices this year, although the macro backdrop remains highly uncertain due to tariff threats,” Sondhi wrote in a report.

There were around 128,000 properties listed for sale across the country at the end of the year, up 7.8 per cent from the end of 2023 but still below the historical average of 150,000 for that time of year. The number of newly listed properties was down 1.7 per cent month-over-month.

Hill said the effect of relative inventory boosts has been felt especially in the Vancouver market.

“Until last year, we didn’t really see that, I’d say probably since 2018 or 2019. It was always low inventory, low rates, buy when you can,” he said.

“Now people have had some choice. They can make decisions without feeling … as much pressure.”

This report by The Canadian Press was first published Jan. 15, 2025.

Sammy Hudes, The Canadian Press