OTTAWA (Reuters) - Greater Toronto area home sales fell in April for a third straight month and prices crept up, as over two-decade high interest rates kept the lid on housing market recovery in Canada's main metropolitan region, data showed on Thursday.
Seasonally adjusted sales declined 3.4% in April from the previous month after falling 2.4% in March, according to Toronto Regional Real Estate Board (TRREB) data.
Average home prices were up 1.5% last month to C$1.12 million ($819,072.69), the highest since December, while new listings were down 5.9%, the date showed.
Home sales rose strongly in December and January, pointing to a revival in the market in anticipation of interest rate cuts by the Bank of Canada. But the frenzy fizzled out from February as slower than expected cooling in inflation and a relatively strong economy pushed back bets of a rate cut.
Economists and analysts are expecting the first 25-basis-point cut in interest rate by the Bank of Canada (BoC) in June or July. The BoC has kept its key overnight rate at a near 23-year high of 5% since July last year.
On a year-over-year basis, sales were down 5% last month due to base effect of April 2023 when there was a temporary resurgence in the market, TRREB said. New listings were up 47.2% on an annual basis which meant there was increased choice for home buyers, it added.
"While sales are expected to pick up, many would-be home buyers are likely waiting for the Bank of Canada to actually begin cutting its policy rate before purchasing a home," said TRREB President Jennifer Pearce.
Money markets are betting that there is more than 50% chance of a rate cut in June, while a cut in July is fully priced in.
"Lower borrowing costs will prompt tighter market conditions in the months to come, which will result in renewed price growth, especially as we move into 2025," said TRREB Chief Market Analyst Jason Mercer (NASDAQ:MERC).
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