Spring housing market remains in ‘holding pattern’
TORONTO — Those hoping that interest rate cuts would boost Canada’s spring real estate market will have to wait a little bit longer after the Bank of Canada once again held rates at five per cent last week.
However, it wasn’t all bad news for housing, as some dovish language from the central bank suggested that stronger-than-expected economic data would not derail the possibility of a cut this year.
“The bank’s hold certainly is not helping the spring market,” TorontoDominion Bank economist Rishi Sondhi said Wednesday following the announcement, noting that his team foresees a subdued spring season amid uncertainty about rate cuts. “We think this will keep the market in a bit of a holding pattern.”
Bank of Canada Governor Tiff Macklem did say a rate cut in June is “within the realm of possibilities,” though the bank was also careful to stress that it wanted to see continued evidence that inflation remains in retreat.
Earlier this month, the Toronto Regional Real Estate Board had expressed high hopes for the spring market, after inventory levels rose in March.
“Homeowners may be anticipating an improvement in market conditions in the spring, which helps explain the marked increase in new listings so far this year,” TRREB Jennifer Pearce said. “Assuming we benefit from lower borrowing costs in the near future, sales will increase further, new listings will be absorbed, and tighter market conditions will push selling prices higher.”
The debate over when rates will start to drop and just how far they will fall is now being pushed back toward the latter half of the year.