Home sales in Canada were down again in September as listings rose, the Canadian Real Estate Association (CREA) said Friday, also lowering its sales and price forecast.
National home sales dropped 1.9 per cent between August and September, according to CREA, while the number of listed properties rose 6.3 per cent month over month. New listings are up 35 per cent month over month and now trending near average levels after hitting a 20-year low in March.
September was the third straight month there was a drop in home sales, although its drop was about half as large as the one in August, CREA noted.
CREA’s chair, Larry Cerqua, said in a statement Friday that September’s numbers show the market is continuing to cool off.
“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,” he said.
“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.”
CREA senior economist Shaun Cathcart said in a statement that what happens next year in Canada’s real estate market depends largely on interest rates.
“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,” he said.
On the sidelines of the annual International Monetary Fund meetings in Morocco Friday, Bank of Canada governor Tiff Macklem said the central bank will be deciding whether to practise patience at its next rate meeting on Oct. 25 or hike rates further.
“What I expect (the meeting will) focus on is, do we stay with a policy rate of five per cent and let past interest rate increases work through the economy and relieve price pressures or is the weight of the evidence of all those economic indicators, when you put them together, is it telling us that more action is needed to restore price stability?” Macklem told reporters in a virtual roundtable.
CREA said benchmark home prices were also down in September for the first time since March, falling 0.3 per cent month over month. However, it noted that was purely the result of trends in Ontario — prices are still rising in all other provinces, but at a slower rate since sales haven’t kept up with new listings.
CREA has now lowered its forecast for sales and average prices for the rest of 2023 and into 2024 due to the weaker sales, pricing trends and “higher for longer” interest rates.
The association predicts that the average home price will decline 3.3 per cent in 2023 to $680,686, down from its previous forecast, but says prices may be up 1.5 per cent in 2024 as demand could increase due to interest rates potentially holding or going down.
Desjardin economist Marc Desormeaux said in a note Friday that the trend of more listings suggests that those who bought homes while interest rates were lower are now struggling with higher borrowing costs.
— with files from The Canadian Press
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