June 16th, 2024

Home sales, prices will likely fall in short term but pick up next spring: TD report

By The Canadian Press on October 26, 2023.

A new report by TD Economics predicts Canadian home sales and average prices will fall in the final quarter of the year and into 2024 but then pick up by the second quarter of 2024. A for sale sign is displayed in front of a house in the Riverdale area of Toronto on Wednesday, September 29, 2021. THE CANADIAN PRESS/Evan Buhler

TORONTO – A new report by TD Economics predicts Canadian home sales and average prices will fall over the coming months but pick up by the second quarter next year.

Economist Rishi Sondhi says the impact of higher interest rates continues to be felt, which will likely push sales and prices lower by 10 and five per cent, respectively, by the end of the first quarter of next year, compared with 2023 third-quarter levels.

The subsequent recovery forecasted is based on an assumption the Bank of Canada will cut its key interest rate by next spring as unemployment rises and the core inflation rate inches lower toward the central bank’s two per cent target.

On Wednesday, the Bank of Canada held its key interest rate steady at five per cent but did not rule out future rate hikes amid projections that show inflation remaining higher in the short term.

Sondhi says that would risk adding pressure on overstretched homeowners renewing their mortgages and push supply higher than expected.

The TD report says it will likely take until 2025 for Canadian home sales to sustainably surpass pre-pandemic levels as affordability challenges persist in most provinces.

This report by The Canadian Press was first published Oct. 26, 2023.

Companies in this story: (TSX:TD)

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