Home sales in Canada experienced a decline in September as listings saw a rise, according to the Canadian Real Estate Association (CREA). CREA also adjusted its sales and price forecast accordingly.
National home sales dropped by 1.9% between August and September, with listed properties increasing by 6.3% month over month. New listings have risen by 35% month over month, bringing them close to average levels after reaching a 20-year low in March.
September marked the third consecutive month of declining home sales, although the decrease was only about half as significant as in August, as noted by CREA.
Larry Cerqua, CREA’s chair, stated that September’s figures indicate a continued cooling off of the market. He added, “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,” Cerqua further explained.
Shaun Cathcart, CREA’s senior economist, emphasized that the future of Canada’s real estate market largely depends on interest rates. He stated, “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.”
Bank of Canada governor Tiff Macklem, speaking at the annual International Monetary Fund meetings in Morocco, mentioned that the central bank will decide between practicing patience or further rate hikes at its upcoming rate meeting on Oct. 25.
CREA reported that benchmark home prices declined by 0.3% in September, marking the first decrease since March. However, this was mainly driven by trends in Ontario, as prices in all other provinces continue to rise, albeit at a slower pace due to sales not keeping up with new listings.
Due to weaker sales, pricing trends, and persistently high interest rates, CREA has lowered its sales and average price forecasts for the remainder of 2023 and into 2024.
The association predicts a 3.3% decline in the average home price in 2023 to $680,686. However, it also suggests that prices may increase by 1.5% in 2024, as demand could rise if interest rates remain steady or decrease.
Economist Marc Desormeaux from Desjardins noted that the increase in listings indicates that buyers who purchased homes when interest rates were lower are now struggling with higher borrowing costs.
— with files from The Canadian Press
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