The global housing market is experiencing notable fluctuations and changes as 2024 progresses, with different regions reflecting diverse trends influenced by economic conditions. From Canada to the United States, the numbers are telling compelling stories about buyers and sellers adjusting to new realities amid rising interest rates and shifting demands.
According to recent data from the Canadian Real Estate Association (CREA), the country's housing market saw significant activity with home sales surging by 7.7% month-over-month through October 2024. This marked the highest level of sales since April 2022, igniting discussions among economists and industry insiders about the factors driving this rebound. Shaun Cathcart, CREA's Senior Economist, attributed the unexpected sales surge to several factors, including the jump in new listings observed back in September and the 50-basis-point interest rate cut announced late October.
“The significant jump in October sales was unexpected but likely tied to the surge in new listings we saw… the 50-basis-point interest rate cut announced at the end of October likely played a role as well,” Cathcart explained. This indicates how interconnected interest rates and housing supply are, and how buyers were possibly waiting for the right moment—bolstered by falling rates—to enter the market.
Regional dynamics are also noteworthy: the Greater Toronto Area (GTA) and British Columbia's Lower Mainland saw double-digit increases, highlighting how even within the same country, local factors can yield vastly different outcomes. On November 20, 2024, CREA revealed there were 174,458 properties on Canadian MLS systems available for sale, reflecting not only the current demand but also showing signs of stability as inventory levels began to decline, indicating competitive conditions. The sales-to-new listings ratio, which measures the relationship between sales and new listings, tightened to 58%, as compared to 52% the previous month, supporting the notion of balanced market conditions.
Shifting over to the U.S. housing market, it's been reported by the National Association of Realtors (NAR) and Freddie Mac how mortgage applications dipped slightly due to persistent high rates, which have fluctuated following the recent elections. Mortgage rates hit 7% just before the presidential election, which naturally created ripples of uncertainty among potential buyers. Following the elections, mortgage rates have remained stubbornly high, leaving many to ponder how this will affect the broader housing market. While the general sales pace has slowed since 2010, there is still notable activity within the luxury housing sector, which is poised to outperform other segments of the market by 2025.
The juxtaposition of the Canadian and U.S. markets showcases how different regions are managing their unique economic pressures. For example, the U.S. has seen luxury markets staying relatively strong amid tougher conditions for mainstream buyers, as it has been reported the market share of first-time homebuyers hit historic lows this year, down to only 26%. Realtors have voiced concerns over this shrinking pool of first-time buyers, which would traditionally stimulate the market.
Meanwhile, year-over-year comparisons reveal contrasting trends. The national composite MLS Home Price Index in Canada showed a minor dip of 0.1% from September to October, with prices holding relatively stable throughout 2024. This stability can be interpreted as cautiously optimistic, particularly as the actual national average home price rose to $696,166, reflecting a 6% increase from the same time last year. This climb suggests some resilience against broader economic pressures.
Real estate experts are also drawing attention to the declining commission rates across the U.S. post-NAR settlement, and how this, alongside the shift to online services, is redefining the industry. The narrative around agent compensation is indicative of the broader changes happening within real estate, as technology continues to disrupt traditional practices and consumer preferences evolve.
Looking forward, both Canadian and U.S. markets face the dual pressures of fluctuated interest rates and dynamic buyer behaviors. Analysts are expressing mixed feelings about what 2025 may hold, gauging the impact of the current activity on future trends. The push for increased housing supply seems like it will continue to dominate discussions, particularly with projections indicating mortgage rates may decline next spring, opening the doors to new possibilities for buyers and sellers alike. Each region will likely navigate these changes differently, influenced by local economies, supply levels, and buyer sentiment.
The global housing market's fluctuative nature serves as both bewildering and exciting for many. It's this complexity, mixed with human behaviors and economic variables, which continually shapes the both Canadian and U.S. landscapes—creating stories, dreams, and sometimes, challenges for buyers and sellers trying to find their place. Understanding these tides will be key for anyone closely monitoring or participating within these markets as the year rolls on.
Each new data point, whether buoyant or troubling, feeds back to the heartbeat of the housing market, urging stakeholders to remain vigilant and responsive as they navigate through the shifts of 2024.
