CREA is calling for a ‘significant unleashing of demand in the spring of 2025,’ but for now, Canadian home sales remain below the 2021 peak.

The Canadian real estate market recovered in 2024 from a year earlier but transactions remain below the highs seen during the pandemic.

Home sales across the country climbed to 490,400 last year, the Canadian Real Estate Association said Wednesday. That’s up 5.2% from the number sold in 2023 but still well below the record 691,000 transactions in 2021.

CREA’s benchmark home price index ended 2024 at $723,600, slightly below the 2023 level of $724,300. There were 3.9 months of inventory available for sale at the end of last year, below the long-term average of 5 months, indicating a sellers’ market, CREA said.

Canada’s housing market is still recovering from the effects of the central bank’s historic hiking cycle, which began in 2022 and saw the overnight rate climb from near zero to 5% over the course of two years to combat surging inflation. The central bank began relaxing rates in June 2024, cutting the overnight rate by 175 basis points to 3.25%, but the anticipated surge in home sales hasn’t yet taken place because so far pent up demand has failed to find sufficient supply.

Shaun Cathcart, senior economist at CREA, referring to December’s 5.8% sales decline from the previous month, said it was “likely more of a supply story than a demand story.”

Still, he’s calling for a burst of sales heading into the next few months. “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.”

CREA sees home sales rising 8.6% to 532,700 this year, and average prices climbing 4.5% to $722,200.

The bigger story may be the tale of two markets, with Ontario, especially Toronto, remaining “soggy” while most of the rest of the country is “firm,” with prices at or near record highs, according to Robert Kavcic, senior economist at BMO Capital Markets.

“The real story is that conditions vary greatly by region and segment, and Toronto (namely the condo market) is being left behind,” Kavcic wrote in a note to clients, adding that Toronto is the last remaining buyers’ market among 23 major cities. “The glut of condos hitting the resale market in that city is clearly marking the weak spot in Canadian real estate.”

Across the entire Canadian market, Kavcic said new listings are still elevated but inventory isn’t building on a national basis, and the sales-to-new listings ratio is still “firmly in balanced territory” at 56.9%, which suggests that “barring another economic shock, the market is set up for modest national price growth this year.”

He pointed out that the total value of sales in 2024 rose 8.2% in dollar terms, the third most valuable year for Canadian real estate on record, behind 2021 and 2022.