On Wednesday, November 15, the Canadian Real Estate Association (CREA) released its national housing statistics for October 2023. Below, CREA’s Senior Economist Shaun Cathcart provides an update on the current state of housing markets in Canada and explains what the data means for members:
Canadian home sales dropped 5.6% from September to October 2023, a sizeable month-over-month decline but not really that surprising as it was simply the continuation of a trend we’ve been watching since August.
This reinforces the idea that after the Bank of Canada’s resumption of rate hikes this summer and the uncertainty that caused, a lot of would-be home buyers have gone into hibernation.
Preparing for spring
The rebound in activity we saw this past spring was an example of what we might see next year. If that were to happen again, this time it would be into a market with more inventory. That would mean more people buying and selling homes, and less pressure on prices. That’s a good thing.
The extent to which demand returns in the spring will really come down to whether the Bank of Canada has to raise 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.
Right now, the consensus is we’re at the top for interest rates and the first in a series of cuts will likely come sometime near the middle of 2024. Some are even guessing the first cut will be in April.
We’ll have a lot more certainty by the time the snow starts to melt next year. That said, the snow has barely begun to fall at this point, so you’re going to have to stay tuned.
Downward trend continues in October
In the meantime, the October new listings numbers were also down for the first time since March, suggesting some sellers may also be thinking about shelving their plans for now.
While new listings are still way up from their lows back in the spring, it’s significant that they appear to have changed direction in October. We had a tight sales-to-new listings ratio of almost 70% just six months ago—we’re now at 50%.
That’s still in the balanced range at this point, but we don’t want to see it fall too much more and for now, it looks like it won’t.
Hibernation: “a state of minimal activity … most commonly occurs during winter months.”
In other words, don’t expect much headline grabbing activity from the resale housing data until next spring.
