Weakness in Canada’s housing markets is now spreading beyond the major markets of Vancouver and Toronto, the latest data reveal.
National home sales were down 5.8% compared to September, while new listings fell 2.3%, marking their first monthly decline since March, according to figures released today by the Canadian Real Estate Association (CREA).
Contrary to previous months, when market weakness was largely confined to Toronto and Vancouver, sales were down in nearly all of the nation’s major markets.
“We’re only in November, but it appears many would-be home buyers have already gone into hibernation,” said CREA chair Larry Cerqua. “The October numbers also revealed some sellers may be shelving their plans until next spring.”
Home prices were generally flat in the month, with the MLS Home Price Index, which adjusts for seasonality, edging down by 0.8% month-over-month, although it remained up 1.1% from last year. On a non-seasonally adjusted basis, the national average home price was $665,625, up 1.5% from September and 1.8% from a year ago.
“Tough conditions” expected to continue into 2024
High interest rates and ongoing affordability concerns are driving the weakness, which, as mentioned above, is now spreading beyond just Ontario and B.C.
“In all, the data very clearly continue to show a Canadian housing market weakening under the weight of stretched affordability and the cumulative effects of sharply higher interest rates,” noted Marc Desormeaux, principal economist at Desjardins.
While regional differences still persist, Desormeaux says those differences are becoming “less distinctive.”
Year-to-date, existing home sales are now down by double digits in nearly all provinces, with the steepest declines being seen in Nova Scotia (-19.7%), Newfoundland and Labrador (-16.7%) and New Brunswick (-16.1%).
“Ample listings, restrictive mortgage rates, very little investor demand and a subdued economic outlook all suggest tough market conditions will continue,” wrote BMO’s Robert Kavcic. “We believe prices are now in another leg lower that could run through around the middle of 2024, depending [on] how the economy and mortgage rate backdrop evolve.”
With the decline in sales outpacing the pullback in new listings, the sales-to-new listings ratio continued to ease to a 10-year low of 49.5%. That’s down from 51.4% in September and a peak of 67.4% in April. Supply also rose to 4.1 months of inventory from 3.7 in September.
Canada’s major housing markets are now mostly in what is considered “balanced” territory, while Toronto is “firmly in buyers’ market territory, and Vancouver appears headed that way as well,” Desjardins said.
Cross-country roundup of home prices
Here’s a look at select provincial and municipal average house prices as of October.
|Location||October 2022||October 2023||Annual price change|
|Barrie & District||$789,200||$800,300||+1.4%|
*Some of the movements in the table above may be somewhat misleading since average prices simply take the total dollar value of sales in a month and divide it by the total number of units sold. The MLS Home Price Index, on the other hand, accounts for differences in house type and size and adjusts for seasonality.