National home sales declined 1.9% month-over-month in September but monthly activity came in 1.9% above September 2022, according to new data released Friday by the Canadian Real Estate Association.
August de Richelieu
CREA said 35,116 MLS sales took place in September across the country and while this marked the third straight month in a row of decrease, September’s drop was only about half as large as the one recorded in August.
“The recent trend of slowing sales and rising new listings continued in September,” said Larry Cerqua, Chair of CREA. “This presents an opportunity for buyers, although many of them seem content to stick to the sidelines until there’s more evidence that interest rates are indeed finally at the top. This, combined with sellers who, by and large, do not need to sell, means the market will likely remain on the slower side until next year. That said, there are still tens of thousands of deals going on every month.”
“Resale housing markets have settled down pretty quickly following this spring’s brief and somewhat surprising rebound in sales and prices,” said Shaun Cathcart, CREA’s Senior Economist. “With the inventory of homes for sale still historically low amid huge demand for housing in Canada, what happens next will depend on interest rates. Whether that means uncertainty about the possibility of further hikes, or just the cost of borrowing money right now, neither of these will be resolved for would-be buyers anytime soon. As such, expect a quieter than normal winter with all eyes on the Bank of Canada. We’ll see how buyers are feeling when the snow starts to melt.”
The number of newly listed homes jumped 6.3% on a month-over-month basis in September, making for a cumulative gain of about 35% from the 20-year low reached back in March. New listings are trending near average levels now, said CREA.
“With sales continuing to trend lower and new listings posting another sizeable gain in September, the national sales-to-new listings ratio eased to 51.4% compared to 55.7% in August and a recent peak of 67.8% in April. It was the first time that this measure has fallen below its long-term average of 55.2% since January,” said the report.
“There were 3.7 months of inventory on a national basis at the end of September 2023, up from 3.5 months in August and its recent low of 3.1 months in June. That said, it remains below levels recorded through the second half of 2022 and well below its long-term average of about five months.”
CREA said the Aggregate Composite MLS Home Price Index (HPI) edged down 0.3% on a month-over-month basis in September 2023— the first decline since March. It was up 1.1% on a year-over-year basis.
The actual (not seasonally adjusted) national average home price was $655,507 in September 2023, up 2.5% from September 2022, added CREA.
Rishi Sondhi, Economist with TD Economics, said September’s Canadian home sales drop was in line with what we imbedded in its latest forecast (see here).
“Meanwhile, the dip in average and benchmark prices points to a relatively resilient backdrop for valuations, at least so far, supported by supply levels that have remained relatively low. That said, pockets of weakness have emerged, led by Toronto, where there was a sharp and concerning rise in new listings last month,” said Sondhi.
“Last month’s burst of supply in Toronto helped send its sales-to-new listings ratio to 36% – its lowest level since the depths reached during the Global Financial Crisis, and a surefire signal that prices are set to sag further in the coming months. It also places some downside risk on our fourth quarter price forecast for this region (and, by extension, Canada), which was already calling for a decline.”
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)
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