Home sales and prices are up.

Listings are also on the rise.

Surprising many analysts, Canada’s housing market made an early recovery in June 2020.

And according to a recent RBC Economics report, the momentum is likely to continue this July.

However, these gains may be all fleeting.

In the same report, RBC economists Nathan Janzen and Claire Fan wrote that the longterm housing market outlook is “still cloudy”.

Janzen and Fan released the report on July 15, the same day that the Bank of Canada announced that it is keeping the interest-setting rate at 0.25 percent.

The 0.25 percent rate is the lowest level that it can be set.

The key rate has been at 0.25 percent since March this year as a response to prevent the economy from tanking because of the COVID-19 pandemic.

According to the RBC Economics report, the Bank of Canada maintained low interest rates because the “the pace and magnitude of the [broader economic] recovery going forward remains largely uncertain”.

The report noted that the central bank also cited the “risk that labour market weakness remains once past the expiry of mortgage deferrals and the phasing out of government support programs (including CERB) later this year”.

The CERB or the Canada Emergency Response Benefit provides financial support to employed and self-employed people affected by the pandemic.

The RBC Economics report also pointed to a slowdown in immigration to Canada, which will negatively impact the market.

According to report, “disruptions to immigration flows could significantly weigh on housing demand relative to pre-shock expectations”.

“We continue to expect the housing market to eventually soften once again – and for prices to decline modestly,” the report stated.

The report noted that easing in social distancing measures “produced a quicker-than-expected recovery in home resales in June”.

Sales across Canada increased 63 perecent from May, and were up 15 percent year over year.

New listings rose 50 percent in June, after increasing by 66 percent in May from the low levels in April.

The composite price index rose 0.5 percent from May in June “after holding flat the prior month”.

“Pent-up demand and supply over March and April, alongside lower interest rates and unprecedented government income supports, will maintain the floor for housing activity in the near-term,” Janzen and Fan wrote.

However, the longterm outlook for the housing market is “still clouded by uncertainty”.

According to the RBC Economics report, “longer-run risks remain given the possibility that labour market weakness outlives exceptional policy supports”.