The Canadian Real Estate Association announced that it will reduce its housing market forecasts for the remainder of the year amid increasing supply levels and a quiet spring driven by fewer expected interest rate cuts in 2024.

The association said on Friday that it expects a gradual recovery in the national housing market, with an estimated 472,395 properties expected to be sold this year, marking a 6.1 percent increase from 2023 - down from its April forecast of a 10.5 percent increase.

The revised forecast comes as CREA announced the latest data on home sales and national prices for June.

Year-over-year, the number of homes changing ownership during the month fell by 9.4 percent, reflecting stronger activity in the spring of 2023. However, CREA stated that sales rose by 3.7 percent on a monthly basis.

CREA's chief economist Shaun Cathcart said in a press release, "It was not a surprising month by any means, but Canadian housing numbers increased slightly on a month-over-month basis in June following the first rate cut from the Bank of Canada."

She added that the average sale price of a home last month was $696,179, down 1.6 percent from June 2023. Nationally, prices rose by 0.1 percent compared to May, marking the first month-over-month increase in 11 months.

TD economist Rishi Sondhi said in a note: "This could be a sign of improved activity going forward."

"In fact, we believe that markets will be stronger in the second half of the year, as the economy holds up and more substantial rate relief is provided. However, affordability conditions are likely to constrain the degree of improvement."

CREA now expects only a 2.5 percent annual increase in the average home price for 2024 to $694,393. This is down from its previous forecast of a 4.9 percent increase.

The Bank of Canada began its rate-cutting process with a reduction on June 5 that lowered the key rate to 4.75 percent from five percent.

Robert Kavcic, chief economist at BMO, said in a note: "In the end, the resale housing market was weak across much of the country in June, with little significant response to the initial rate cut in this cycle."

"For the Bank of Canada, this will be good news as the market is not standing in the way of more easing at this stage."

John Lussier, head of Right at Home Realty, said in an interview that potential additional rate cuts from the central bank later this year could push more potential buyers further out of reach.

Lussier said: "I think that if they are substantial enough, we could see a slight uptick in activity by mid to late Q4," adding that he would be "surprised if we do not see rate cuts throughout the remainder of the year."

"I wouldn't tell any buyers: wait, but take your time, there's a lot of inventory out there right now."

There were about 180,000 properties available for sale across Canada at the end of June, a 26 percent increase from the previous year but still below historical averages of around 200,000 properties at this time of year.

New listings grew by 1.5 percent on a monthly basis in June, led by the Greater Toronto Area and British Columbia.

Lussier said: "You have sellers sitting on one side, buyers on the other, and the two sides are not meeting in the middle; it's kind of a wait-and-see pattern."