Canadian Home Sales Slow as Buyers Await More Rate Cuts

Canadian home sales dropped in December as buyers took a break from the market to await further interest-rate cuts from the central bank that may make purchases more affordable.

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Bloomberg News

Ari Altstedter

Published Jan 15, 2025  •  2 minute read

"For Sale" signs in front of homes in Colwood, British Columbia, Canada, on Monday, Sept. 16, 2024. Canada home sales climbed last month to the highest level since January as buyers benefited from lower borrowing costs. Photo by James MacDonald /Bloomberg

(Bloomberg) — Canadian home sales dropped in December as buyers took a break from the market to await further interest-rate cuts from the central bank that may make purchases more affordable.

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The number of homes that traded hands in the country fell 5.8% from November, the first decline in five months, according to data released Wednesday by the Canadian Real Estate Association. The benchmark price of a home still eked out a 0.3% gain to C$723,600 ($505,272), the data show.

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December’s slowdown came after a string of interest-rate cuts delivered by the Bank of Canada last year helped breathe life into the country’s housing market, prompting a rebound in sales. Even with last month’s drop, the fourth quarter was among the strongest in the past 20 years, according to the real estate board. Total transactions for the three-month period were up 10% from the third quarter.

“The number of homes sold across Canada declined in December compared to a stronger October and November,” Shaun Cathcart, the real estate board’s senior economist, said in a statement accompanying the data. “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.”

Though winter and the holiday season usually cool home transactions, the prospect of a trade war with the US, Canada’s largest trading partner, has stoked a wave of uncertainty and apprehension as Canadian policymakers scramble to respond. Incoming US President Donald Trump has threatened to impose tariffs on imports of goods from Canada. 

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Even as anxiety about tariffs grows, further interest rate reductions are expected to come in time for the crucial spring home-selling season. Economists project Canada’s central bank will cut its benchmark rate to 3% from 3.25% when policymakers meet at the end of January, and then keep going until the rate hits 2.5% by the middle of the year, according to the median estimate in a Bloomberg survey.

More rate cuts should help spur transactions in Canada’s housing market this year, the real estate board said. The group expects sales to increase 8.6% this year from 2024, according to a forecast released Wednesday that upwardly revised a previous estimate of 6.6%.

The national average home price, which is different from the benchmark home price, is expected to rise 4.7% this year from 2024, according to the statement.

(Updates with new forecast starting in seventh paragraph.)

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