The Canadian housing market continues to experience a downturn, with a decline in both property listings and sales, according to the latest monthly data from the Canadian Real Estate Association (CREA).
Released by CREA on Wednesday, the data indicates a 5.6% drop in Canadian home sales in October, reflecting a concerning trend. Larry Cerqua, CREA’s chair, remarked, “We’re only in November, but it appears many would-be home buyers have already gone into hibernation. The October numbers also revealed some sellers may be shelving their plans until next spring.”
In addition to the decrease in sales, new listings also fell by 2.3% in October compared to the previous month. This led to a sales-to-new listings ratio of 49.5%, described by CREA as a “10-year low.”
The sales-to-new listings ratio is a key metric in real estate, indicating the relationship between homes sold and new listings added to the market. A higher percentage favors sellers, while a lower percentage favors buyers. The current ratio suggests a buyer’s market.
CREA notes that Canada’s “long-term average” sales-to-new listings ratio is around 55%, spiking to 67.9% in April. Despite the fall in home sales this fall, activity remains higher than the previous year, with October’s home sales 0.9% above those in October 2022.
Monthly data reveals a 0.8% decline in average home prices in October compared to the previous month. While price declines are more pronounced in Ontario, British Columbia is also experiencing softening prices.
However, when compared to yearly data, the national average home price increased by 1.8% to $656,000 in October, reflecting a positive trajectory.
Regional variations in residential pricing show increases across 10 provinces, with Newfoundland and Labrador being the exception, seeing a two percent drop. New Brunswick experienced the highest increase, with average residential prices over 12% higher in October 2023 compared to the previous year.
As of October 2023, there is a 4.1-month inventory of properties on the market at the current sales pace, a metric known as “months of inventory.” While up from the low of 3.1 months in May, it remains below the long-term average of nearly five months.
Shaun Cathcart, CREA’s senior economist, emphasized, “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.” He added that the future market dynamics could be influenced by the Bank of Canada’s decisions on interest rates.