The country’s housing market continued to slow in September, showing a stark contrast to the frenzied pace of sales that fall usually brings, the Canadian Real Estate Association (CREA) said Friday.
September sales were down 3.9% from August, representing a slight intensification of the slowdown that began after the Bank of Canada’s first interest rate hike in March. Compared to the same month last year, home sales fell 32.2% in September, and the number is about 12% below the 10-year pre-pandemic average for that month.
“In September, sales were again weak. However, as many selling owners are patient, the market remains tight, but balanced,” CREA President Jill Oudil observed in a press release. “It’s an interesting dynamic, rarely seen in the past. »
The national slowdown reported by CREA comes nearly two weeks after real estate boards in many major cities, including Toronto and Vancouver, reported lower sales and a much lower than expected number of new listings for sale, for which is usually one of the busiest times of the year. Instead of the usual frenzy, they saw few bidding wars and many sellers were discouraged from listing their properties because they feared they wouldn’t get as much money as their neighbors had done earlier. early this year, when the market was moving at a breakneck pace.
“Market Deadlock”
Economist Robert Kavcic, senior economist at BMO Capital Markets, pointed to the conditions as causing a “market stalemate.” “Buyers can’t qualify for, or afford, start-of-year pricing, and likely don’t want to [se retrouver avec une propriété dont la valeur va diminuer] anyway,” he wrote in a note to investors. “But sellers are able to wait for better market conditions to arise, or, in the case of investors, to put units on the rental market. In other words, the market is not clearing right now, hence the lack of trading volumes. »
He noted that while the market balance is weak, there is no forced sale or dumping of properties, and added that he still considers new listings to be “doing very well” as the number of newly listed homes fell 0.8% month over month in September. On an annual basis, new listings decreased by 1.5%.
“Listings fell for a third consecutive month, indicating that the slowing economy and rising interest rates have not yet forced a significant increase in supply,” observed James Orlando, director and senior economist at TD Economics, in a note to investors. “In fact, the low price conditions are keeping potential sellers away. »
The real national average house price was $640,479 in September, down 6.6% from the same month last year. This average price drops by $117,000 when we exclude the Vancouver and Toronto areas, two of the busiest and most expensive markets in Canada, CREA said. On a seasonally adjusted basis, the national average home price totaled $650,172, down 1.2% from August.
While the Bank of Canada is expected to continue raising its key rate, Orlando expects further price pressure and predicted a 22% drop in the average house price between the start of 2022 and 2023.