MLS home sales in Canada fell sharply in September compared with a year ago as the housing market in the country continued to cool, according to a new report released Friday by the Canadian Real Estate Association.
CREA said sales fell 3.9 per cent between August and September and they came in 32.2 per cent below September 2021 while standing at 12 per cent below the pre-pandemic 10-year average for September.
“September was another month of lower sales activity, although, with many sellers also opting to play the waiting game,
the market remains on the tighter side of balanced market territory,” said Jill Oudil, Chair of CREA. “It makes for an
interesting dynamic, one that doesn’t really have many historical precedents. The market has changed so much in the last
year, and the adjustment to higher borrowing costs is still underway.
“Up until recently, higher borrowing costs had disproportionally affected the fixed-rate space, with buyers able to qualify
more easily if they went with a variable rate mortgage,” said Shaun Cathcart, CREA’s Senior Economist. “The Bank of
Canada’s most recent rate hike in early September finally closed that door, so it was not a big surprise to see additional
softness on the sales side. The important thing to remember is we’re still in the middle of a period of rapid adjustment, with
buyers and sellers trying to feel each other out while a lot of people have had to take their home search plans back to the
drawing board. As such, resale markets may remain on the quiet side for some time yet, with the flipside of that coin being
even more pressure on rental markets.”
CREA said the number of newly listed homes edged back a further 0.8 per cent on a month-over-month basis in September. This built on the 6.1 per cent and 4.9 per cent declines recorded in July and August, respectively, as some sellers appear content to stay on the sidelines.
The non-seasonally adjusted Aggregate Composite MLS HPI was still up by 3.3 per cent on
a year-over-year basis in September, a far cry from the near-30 per cent record year-over-year gains
logged in early 2022, said the report.
“Expect MLS HPI year-over-year comparisons to shift slightly into negative territory in the final
months of this year, with declines becoming larger next spring – a year out from the peak. The actual (not seasonally adjusted) national average home price was $640,479 in September 2022, down 6.6 per cent from the same month last
year. The national average price is heavily influenced by sales in Greater Vancouver and the GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from the calculation cuts more than $117,000 from the national average price,” added CREA.
The report can be found here.
Robert Hogue, Assistant Chief Economist with RBC Economics, said Canada’s housing market’s downturn has longer to run.
“September data gave few indications the bottom is near. Both activity and prices continued to trend lower in the vast majority of local markets. Demand-supply conditions generally eased some more. And with further interest rate hikes likely on the way in the coming months, we expect more of the same in the period ahead across the country. That said, activity in Ontario and British Columbia may be closer to stabilizing, though not so much for prices due to persisting affordability issues,” he said.
“Rising rates will intensify affordability issues in the near term and sustain heavy downward pressure on home prices. We expect benchmark prices will fall approximately 14 per cent nationwide by next spring from the recent peak, with steeper declines (-16 per cent) in Ontario and British Columbia, and milder corrections in Alberta and Saskatchewan (-4 per cent).”
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
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