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New real estate data suggests home buyers have already packed up for winter

The latest report from the Canadian Real Estate Association (CREA) reveals that the downward trend in Canadian home sales persisted through the month of October 2023. The statistics, released on Nov. 15, indicate a notable decline in national home sales on a month-over-month basis, indicating that the fall market is over.

According to the data, national home sales experienced a significant 5.6% decrease in the month of October. Despite this decline, the actual (not seasonally adjusted) monthly activity managed to surpass the figures recorded in October 2022 by 0.9%. This suggests a nuanced picture of the real estate market, with fluctuations in sales occurring over different timeframes.

The report also sheds light on the number of newly listed properties, which saw a 2.3% month-over-month decline. This reduction in newly listed properties could potentially impact the overall market dynamics, influencing supply and demand factors.

The MLS® Home Price Index (HPI), a key indicator of housing market trends, registered a 0.8% month-over-month decrease. However, on a year-over-year basis, the HPI showed a modest increase of 1.1%. These contrasting figures highlight the complexity of the real estate landscape, with short-term fluctuations against a broader backdrop of sustained growth.

A notable aspect of the report is the observation that the actual (not seasonally adjusted) national average sale price demonstrated a 1.8% year-over-year increase in October. This increase in average sale price, despite the monthly decline in the HPI, underscores the varying factors influencing housing prices in different regions of the country.

The data also revealed that home sales recorded over Canadian MLS® Systems posted a 5.6% decline between September and October 2023. This sizable drop is attributed to reduced sales in most of Canada’s largest markets.

“We’re only in November, but it appears many would-be home buyers have already gone into hibernation,” said Larry Cerqua, Chair of CREA. “The October numbers also revealed some sellers may be shelving their plans until next spring. That said, there are still a lot of people active in the market and looking to get deals done this year.”

The report also highlighted a 2.3% month-over-month decrease in newly listed homes in October, marking the first decline since March. As a result of sales falling more than new listings, the national sales-to-new listings ratio eased to 49.5%, reaching a 10-year low. The long-term average for this measure is 55.1%, emphasizing the notable departure from typical market conditions.

“We know housing demand is extremely high all across the country, but October’s resale data was further confirmation that it probably won’t be manifesting itself in the existing home market for the remainder of this year and likely not until spring 2024 at the earliest,” said Shaun Cathcart, CREA’s senior economist. “The rebound in activity this past spring was an example of what we might see next year.”

The report concluded with an analysis of inventory levels, indicating 4.1 months of inventory on a national basis at the end of October 2023. While this represents an increase from its low of 3.1 months in May, it remains below the long-term average of approximately five months of inventory.

The Aggregate Composite MLS® Home Price Index (HPI) showed a 0.8% month-over-month decline in October 2023, with price declines primarily observed in Ontario. Additionally, the HPI revealed a year-over-year increase of 1.1%. The actual (not seasonally adjusted) national average home price in October 2023 was reported at $656,625, reflecting a 1.8% increase from the same period in 2022.

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