Existing home sales in Canada witnessed a 5.6% drop in October, marking the fourth consecutive month-over-month decline. This decrease can be attributed to higher interest rates that continue to impact consumption.
According to data from the Canadian Real Estate Association, transactions in October were 0.9% lower than the sales from the same period last year, on an unadjusted basis. This data highlights the cooling effect on Canada’s economic activity due to the Bank of Canada’s yearlong-plus rate-raising campaign, which has led to borrowing costs reaching a 22-year high. The housing market, which was a driving force for growth during the pandemic, has experienced a particularly significant deceleration as consumers benefited from near-zero interest rates.
In June 2022, home sales witnessed the steepest fall since then, declining by 6.4%.
Larry Cerqua, chairman of the real estate association, stated, “It appears many would-be home buyers have already gone into hibernation.”
The head of Toronto real estate brokerage Realosophy, John Pasalis, mentioned that sales of detached homes in Toronto reached their lowest level on record in October.
The national data revealed that benchmark house prices, calculated similarly to the S&P CoreLogic Case-Shiller National Home Price Index, fell by 0.8% in October compared to the previous month. However, they increased by 1.1% when compared to the same time last year. Over a three- and five-year period, prices rose by 26% and 28%, respectively.
In October, the number of newly listed homes decreased by 2.3% compared to the previous month. This marks the first decline since March. Consequently, the sales-to-new listings ratio dropped to a 10-year low of 49.5%. The long-term average for this measure is 55.1%, and it recently reached as high as 67.9% in April.
