In a remarkable turnaround for the Canadian housing market, August 2024 home sales surged to their highest level in four years, defying earlier predictions of a prolonged slump. The unexpected boom comes as mortgage rates begin their gradual descent and buyer confidence strengthens across major urban centers from Vancouver to Halifax.
The Canadian Real Estate Association (CREA) reported that national home sales jumped 12.3% in August compared to the same month last year, with approximately 58,000 residential properties changing hands. This represents the strongest August performance since the pre-pandemic market of 2020, when record-low interest rates first triggered a nationwide buying frenzy.
“What we’re witnessing is the release of pent-up demand that’s been building since the Bank of Canada began its aggressive rate-hiking cycle,” explains Devin Matthews, chief economist at Dominion Financial Group. “Many prospective buyers who retreated to the sidelines are now jumping back in, fearing they might miss the opportunity as prices begin to climb again.”
The surge in activity has been particularly pronounced in mid-sized markets like London, Hamilton, and Victoria, where affordability concerns had previously dampened enthusiasm. These secondary markets are now seeing bidding wars return for desirable properties, especially family homes with outdoor space – a lingering preference that emerged during pandemic lockdowns.
Benchmark prices have responded accordingly, with the national average home price reaching $732,400 in August, representing a 5.8% increase from the previous year. The Greater Toronto Area leads with a 7.2% year-over-year price gain, while Vancouver’s market has seen more modest appreciation at 4.1%.
The Bank of Canada’s recent policy shifts have been instrumental in revitalizing the market. After holding its key overnight rate steady earlier this year, the central bank delivered two consecutive rate cuts, bringing the benchmark rate down to 4.25% – still historically high, but offering meaningful relief to borrowers.
“Mortgage qualification has eased slightly, and we’re seeing five-year fixed rates below 5% for the first time in nearly two years,” notes Samantha Chen, director of mortgage services at National Trust. “For many buyers, that psychological threshold makes all the difference in their decision to enter the market.”
The robust sales data has prompted analysts to revise their housing forecasts upward for the remainder of 2024, though concerns about affordability persist. The surge in activity occurs against a backdrop of Canada’s ongoing housing supply crisis, with new construction struggling to keep pace with population growth driven by record immigration.
Federal Housing Minister Marcus Thompson acknowledged the challenge in a recent statement: “While increased market activity is encouraging for existing homeowners, we remain focused on addressing the fundamental supply-demand imbalance that continues to put pressure on affordability for first-time buyers and newcomers to Canada.”
Industry observers note that the inventory of available homes remains near historic lows in many markets, with just 2.8 months of inventory nationally – well below the long-term average of 5 months. This supply constraint is likely to maintain upward pressure on prices despite higher interest rates compared to pre-pandemic levels.
The resurgence in market activity has also highlighted regional disparities across Canada’s housing landscape. While British Columbia and Ontario lead the recovery, Alberta’s markets have shown remarkable resilience throughout the interest rate cycle, benefiting from stronger provincial economic growth and relative affordability.
As autumn approaches – traditionally a second peak season for real estate – the question remains: can this momentum be sustained, or are we witnessing a temporary surge before affordability constraints once again dampen buyer enthusiasm in Canada’s notoriously expensive housing market?
