B.C.’s housing market remained mired in its slump in August despite Bank of Canada rate cuts. On a monthly basis, seasonally adjusted MLS home sales in B.C. fell 2.3 per cent in August to reach 5,934 units, marking a steeper decline than the 1.1-per-cent dip in July. On a year-over-year basis, sales declined by 7.4 per cent as the downward trend in year-over-year home purchases persisted. Potential buyers may be postponing home purchases in advance of further rate cuts.
Most B.C. real estate board areas recorded fewer home sales during the month. Specifically, the Greater Â鶹´«Ã½Ó³»area real estate board saw home purchases dip by 3.8 per cent in August, following the drop of 2.4 per cent in the prior month. Home sales in the area have been range-bound since the last quarter of 2023. Month to month, sales fell by 8.7 per cent in the Okanagan Mainline, erasing the 2.5-per-cent increase in July, while they declined by 4.9 per cent in South Okanagan. The Kootenay real estate board also reported a drop in sales of 5.1 per cent. In contrast to these notable losses, increases were seen on Â鶹´«Ã½Ó³»Island (4.9 per cent), and in Chilliwack (2.2 per cent), Kamloops (2.1 per cent) and the Fraser Valley (0.2 per cent).
The average home price in B.C. fell 1.2 per cent to reach $973,053. This is down 8.8 per cent from a peak in February 2022, and down year over year by 1.6 per cent. That said, levels remained resilient given high mortgage rates. Home values in Greater Â鶹´«Ã½Ó³»decreased by two per cent monthly and marked the first year-over-year decline since April 2023. Home prices also moved down by one per cent monthly in Kamloops and the Kootenay, and by 2.6 per cent in Chilliwack. Home values rose in other areas, including the Fraser Valley (3.7 per cent), South Okanagan (2.3 per cent), Okanagan Mainline (1.1 per cent) and Â鶹´«Ã½Ó³»Island (0.4 per cent).
Average prices can mask compositional sales effects and the benchmark price index, which accounts for home attributes and product composition, increased in August by 0.3 per cent. That said, benchmark price changes tend to lag average price turns. With multiple rate cuts on the way, market conditions will likely gain speed in the last months of 2024 and into 2025. We see a risk that home prices will move sharply higher in 2025 amidst higher demand and constrained housing supply.
Meanwhile, retail sales increased in Canada in July, with seasonally adjusted sales up 0.9 per cent from June to $66.4 billion, bouncing back up from a monthly year low. Year to date, unadjusted sales are up one per cent. The increase in spending profile was similar in B.C., where sales increased one per cent to a seasonally adjusted $8.95 billion in July. However, year-to-date unadjusted retail sales declined 0.1 per cent to $61.2 billion.
Five out of the nine sub-sectors in B.C. recorded higher year-over-year unadjusted July retail sales. Health and personal-care retailers reported a 17.9-per-cent, year-over-year increase in sales in July. General merchandise retailers also saw a monthly year-over-year increase of 2.3 per cent to $1.1 billion. Clothing, clothing accessories, shoes, jewelry, luggage and leather goods retailers saw a 3.3-per-cent, year-over-year increase to $652 million.
Bryan Yu is chief economist at Central 1.
