Canadian home sales, listings, prices down in November from a month earlier

In a recent report by the Canadian Real Estate Association (CREA), it was revealed that home sales, prices, and listings witnessed a downturn in November compared to the previous month. The decline, attributed to a wait-and-see approach amidst uncertainty over interest rates, underscores the cautious sentiment prevailing in the real estate market.

According to CREA, home sales dropped by 0.9% in November compared to the same period last year. This decline was mirrored in seasonally adjusted figures when compared to October, indicating a consistent trend. The fall in sales was accompanied by a 1.8% decrease in new listings, marking the second consecutive month of declining listings. Senior economist Shaun Cathcart noted that sellers are increasingly postponing listing their properties, possibly waiting for more favorable conditions in the coming year.

"The drop in new listings shows sellers are increasingly holding off until next year, despite a surprising number of whom entered the market in early fall," said Cathcart in a CREA release. "Not getting offers they were willing to accept, it’s looking like many of them are also now resigned to hunker down until next year."

Average home prices experienced a marginal dip of 0.3% from the previous month or 1.1% based on the MLS home price index. However, the index also revealed a 0.6% increase from the previous year, reaching $735,500. The actual national average price of a home sold in November was $646,134, reflecting a 2% uptick from November 2022.

Cathcart suggested that the decision of some homeowners to hold back on listing might be a prudent move given the current expectations around interest rate cuts, which could potentially lead to a more active spring market.

The Bank of Canada has maintained interest rates over three consecutive rounds of decisions, but the possibility of rate hikes still looms. While fixed mortgage rates declined in November in anticipation of central bank movements, it hasn't been sufficient to stimulate the market, according to TD economist Rishi Sondhi.

"Even with rates falling last month, they were still at elevated levels, which was enough to weigh down housing sales," noted Sondhi in a report.

The overall home sales scenario in Canada is now 18% below its pre-pandemic level. Manitoba, British Columbia, and Quebec experienced outsized declines, while Ontario saw notable sales growth. Despite gains in Ontario, the province still favors sellers, potentially leading to price discounts in the coming months.

CREA revealed that, with new listings down more than sales in November, the national sales-to-new listings ratio rose for the first time since April, reaching 49.8% compared to 49.4% in October. CREA Chair Larry Cerqua expressed optimism that the market is stabilizing into balanced territory, signaling a soft landing.

"I wouldn’t expect anything too headline-grabbing from the resale housing market for the next few months," said Cerqua, suggesting a period of relative stability in the Canadian real estate landscape.