Canadian home sales see downward trend continue in October: CREA

Home sales recorded over Canadian MLS Systems posted a 5.6% decline between September and October 2023. The sizable decline was the result of fewer sales in most of Canada’s largest markets, according to a report released Wednesday by the Canadian Real Estate Association.

Andrea Piacquadio

The actual number of transactions in October 2023 came in 0.9% above October 2022.

“We’re only in November, but it appears many would-be home buyers have already gone into hibernation,” said Larry Cerqua, Chair of CREA. “The October numbers also revealed some sellers may be shelving their plans until next spring. That said, there are still a lot of people active in the market and looking to get deals done this year.”

“We know housing demand is extremely high all across the country, but October’s resale data was further confirmation that it probably won’t be manifesting itself in the existing home market for the remainder of this year and likely not until spring 2024 at the earliest,” said Shaun Cathcart, CREA’s Senior Economist. “The rebound in activity this past spring was an example of what we might see next year. It will really come down to whether the Bank of Canada has to increase interest rates again, or whether by next March it’s simply a matter of how soon we’ll see the Bank make its first cut.”

The report said the number of newly listed homes fell 2.3% on a month-over-month basis in October, the first decline since March. With sales falling by more than new listings in October, the national sales-to-new listings ratio eased to 49.5% — a 10-year low. The highest level for this measure was 67.9%, recorded in April. The long-term average for this measure is 55.1%, added CREA.

There were 4.1 months of inventory on a national basis at the end of October 2023, up a full month from its low of 3.1 months in May. That said, it remains below its long-term average of near five months of inventory, it said.

The Aggregate Composite MLS Home Price Index (HPI) declined by 0.8% on a month-over-month basis  in October 2023. While price declines are still mainly an Ontario phenomenon, home prices are also now starting to soften in parts of British Columbia. The Aggregate Composite MLS HPI was up 1.1 per cent on a year-over-year basis.

The actual (not seasonally adjusted) national average home price was $656,625 in October 2023, up 1.8% from October 2022, explained CREA.

“Unsurprisingly, high interest rates continued to weigh on home sales last month. Notably, per capita sales are hanging around levels last recorded over 20 years ago. Although there’s been some considerable relief on the rates front recently (the Canadian 5-year bond yield is down considerably from its early October peak) they remain elevated. This should continue to pressure demand in the near-term,” said Rishi Sondhi, Economist with TD Economics.

“Conditions very much favour buyers in B.C. and Ontario. In fact, Ontario’s sales-to-new listings ratio is the lowest it’s been since the Global Financial Crisis. This strongly suggests that prices will head lower in these two markets over the next several months, dragging down the nation-wide average price. That said, some relief should come next year as the Bank of Canada begins cutting rates.”

Mario Toneguzzi

Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)