Canada home sales slip as buyers seek more interest-rate relief

CANADIAN home sales dipped in July as buyers waited on the sidelines for further possible rate cuts from the central bank.

Transactions fell 0.7 per cent in July from a month earlier, according to data released on Thursday (Aug 15) from the Canadian Real Estate Association. The benchmark price of a home rose 0.2 per cent from a month earlier to C$718,700 (S$692,271). 

The Bank of Canada cut interest rates at its meetings in June and July, bringing slight relief to a housing market that had been under pressure from some of the highest borrowing costs in more than 20 years. With job growth stalling, the market’s expecting the central bank to cut rates even more, which could be causing buyers and sellers to bide their time until more easing arrives.

“While there were early signs of renewed momentum in June following the Bank of Canada’s first interest-rate cut since 2020, activity in Canada’s housing market took a pause in July,” the real estate association said in a statement.

Economists are expecting the Bank of Canada to drop its benchmark interest rate to 4 per cent by the end of the year from the 4.5 per cent where it currently sits, a Bloomberg survey shows. And markets are pricing in even more aggressive action, with swaps trading implying the Bank of Canada will be forced to cut its rate to around 3.75 per cent by the end of the year, according to Bloomberg calculations.

Home sellers in Canada continue to enter the market, with the number of newly listed properties rising 0.9 per cent in July from the previous month, the real estate association report showed. BLOOMBERG