After a positive increase in sales in October, Canadian home sales fell by 3.3% in November, according to the Canadian Real Estate Association (CREA). New listings are following suit, hitting unfortunate records in terms of supply, or lack thereof.
Declining Sales Expected to Persist Throughout the Winter
Sales numbers have generally trended downwards since the Bank of Canada started raising interest rates in March. The majority of Canadian markets have had much lower yearly sales numbers. Fraser Valley, for example, suffered a 58.3% drop from 1,894 to 786 sales, while roughly 60% of markets have seen month-over-month declines. Toronto sales have fallen by 8.3% since October, and Edmonton has had a 17.2% decline. Sherbrooke, however, is one of few markets where sales have seen a moderate increase of roughly 2.1%, and 146 homes trading hands.
The decline in sales throughout the year has mostly been driven by the rising interest rates. Shaun Cathcart, CREA’s senior economist noted that, while this month’s figures are not a surprise, next year could see a change in market conditions if the Bank decides to ease its tightening cycle. He said: “November’s housing data from across Canada came in as expected – still pretty quiet – and that is unlikely to improve this winter with the Bank of Canada raising rates again last week. It will be interesting to see what buyers do when listings start to come out in big numbers in the spring, and even more interesting to see what happens a little later when the Bank of Canada, now widely thought to be at or very near the top of its tightening cycle, starts to eventually cut rates. All the other fundamental factors needed for the market to take off again are still out there.”
Inventory Dwindles as Fewer New Listings Entering Market
More than half of local markets suffered declines in new listings, many of which were already navigating tight supply. New listings edged down 1.3% month-over-month. Options are dwindling for prospective buyers as new supply hit a 17-year record low, aside from one outlier in 2019. Like in previous months, some of the historically most active markets are being hit hardest. Toronto has experienced a 14.5% decline in new listings from 10,389 to 8,880 month-over-month, while other major markets including Vancouver and Calgary have dropped by 23.6% and 25.4% respectively.
Despite the drop in new listings, inventory is seeing an improvement in Canada, if only very slightly. While the figure is still quite low, there is currently 4.2 months worth of inventory available, as opposed to 3.8 in October. However, it is still below the long-term average by nearly a full month.
Some Markets Are Experiencing Price Gains
Some smaller markets are experiencing price gains over 2021. For example, Greater Moncton’s benchmark price is up 12.8% from last November. Overall, Alberta has had a strong year, which is reflected in Calgary’s price gains of 9.3% year-over-year.
However, prices are flattening, suggesting that the average prices in many of these areas are likely to stay in and around those figures until the market picks up. The majority of markets are seeing declines and improvements of less than 2% – Fredericton has had the largest month-over-month decline of just 3.9% while the greatest improvement was seen in Cambridge with just a 1.8% increase in price to $744,200.
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