Canada’s biggest housing markets saw a “sizable decline” in sales last month, according to the national real estate body, as would-be buyers and sellers alike increasingly put their plans on hold.
The Canadian Real Estate Association (CREA) said Wednesday that home sales recorded in October were down 5.6 per cent from the previous month, as activity slowed in “most” of Canada’s largest markets.
On a non-seasonally adjusted basis, the national average sale price for a home in October was $656,625. That’s up 1.8 per cent annually and slightly above figures seen in September.
Another key metric, the sales-to-new listings ratio, showed Canada’s housing market continued to trend in favour of buyers at the negotiation table.
This ratio slowed to 49.5 per cent in October, reaching a 10-year low, CREA said. That compares to an all-time high of 67.9 per cent recorded in April and the long-term average of 55.1 per cent.
A higher sales-to-new-listings ratio implies a tighter housing market in favour of sellers; the lower the figure goes, the more choice and power buyers tend to have in negotiating transactions.
But the trends towards a buyers’ market come as higher interest rates from the Bank of Canada limit buying power for many Canadians.
Larry Cerqua, chair of CREA, said in a statement Wednesday that “it appears many would-be buyers have already gone into hibernation” by November.
A slowdown in the number of new listings in October also shows that sellers might be “shelving” their plans, Cerqua said. He added that “there are still a lot of people active in the market and looking to get deals done this year.”
CREA senior economist Shaun Cathcart said that while housing demand is still “extremely high” across the country, October’s data is showing that pressure is likely to be suppressed until spring 2024 “at the earliest.”
“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,” Cathcart said in a statement.
He projected that the level of activity seen this past spring, when sales and prices jumped in many markets as the Bank of Canada’s rate cycle was on pause, could be what’s in store six months from now if there are signs the central bank is ready to cut rates.
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