We Wait for the Rate
Precious little has changed in Canada’s housing market in recent months despite Bank of Canada rate cuts, and that remained true in September. In a nutshell, sales volumes are subdued but stable, listings continue to build and prices remain flat on a national basis. We’re moving further down the rate-relief path, but it’s still going to take more to get the market moving again.
Canadian existing home sales edged up 1.9% in seasonally-adjusted terms in September, and were up 6.9% from year-ago levels (recall that the market was weakening into the fall/winter last year). This continues a trend of largely stable sales activity consistent with the lower end of the pre-COVID range. Meantime, new listings jumped 4.9% in September (seasonally adjusted) and 7.6% from a year ago. Listings flow is firm relative to past-decade norms, with September’s tally running almost 11% above the 10-year average. This continues to bog prices, but is not completely saturating the market. That combination pulled the sales-to-new listings ratio down to 51.3 in the month, still in balanced territory but clearly a softer market than we’ve been accustomed to across much of Canada.
Balanced overall market conditions leave price trends going sideways, with the MLS Benchmark price still down 3.3% in the past year, and holding flat in recent months. Prices are effectively unchanged over the latest 3- and 6-month periods—a perfectly soft landing so far.
Variable market conditions continue to show through at the regional level. While Calgary's market is still relatively tight, there has been a clear softening in recent months. A normalizing market balance has cooled price growth from a double-digit rate late last year to sub-3% annualized in recent months. That said, sellers’ markets persist across much of the Prairies, as well as Atlantic Canada, where relative affordability and inward migration flows continue to support demand. Vancouverand Montreallook mostly balanced, but the latter is outperforming and posting a better-than-average price performance over the past year—that appears to be accelerating. Ontario remains the soft spot, with buyers’ markets still scattered across various areas of the province. Toronto continues to see a wave of condo supply saturate the market. While scarcer single-detached housing has tempered the deterioration, the sales-to-new listings ratio in the city has now sunk to 35.5, the lowest level since the 2009 recession. Condo prices in the CMA are now down 7.5% y/y, the worst performance across the major segments/locations that we track.
All told, the resale housing market still hasn’t responded meaningfully to early Bank of Canada rate cuts, which was entirely expected. But, with expectations of more aggressive easing—including a possible 50 bp rate cut later this month—Canadians could be presented with mortgage rates by next spring that start to make things make more sense. In the meantime, the quiet/flat/stable/stagnant market continues...