Canadian Existing Home Sales (Oct.) — All Avenue Freeze-Out
- Keywords:
- housing
Tumbleweeds continued to blow across the Canadian housing market in October, with activity very depressed as the market continues to adjust to higher interest rates. But it could be worse. National home sales edged up 1.3% in October (seasonally adjusted), but were down 36% from a year ago. That still leaves activity volume below the low end of pre-COVID norms. As far as October goes, this was the quietest for unit volumes since the economy was climbing out of recession in 2010.
New listings rose 2.2% in the month and are down a modest 1.3% from a year ago. We’ll reiterate again that, while sales have swung wildly, new listings have held very steady through the recent turbulence and are very much in-line with pre-COVID norms. There’s just not a lot of forced selling out there at this stage, which can really exacerbate or speed up a price correction.
Still, the market balance is soft, with the sales-to-new listings ratio weakening slightly to 51.6% in October. That’s not a terrible number, as we tend to see recessionary conditions yield ratios below 40% (e.g., 2009 and the early-1990s). But, it is certainly leaving buyers with much more power. Meantime, the months’ supply of homes for sale at the current sales rate rose to 3.8, which is still relatively lean by historical standards.
So, we have a unique situation where demand has cracked and buyers can’t qualify for, or afford, early-year prices. But, outside some areas, there’s not a bounty of listings to choose from, and sellers are still able to say “no thanks” and pull listings. Think of it as a wide bid-ask spread that is making it very hard for the market to clear, and price discovery a relatively slow process. That said, the direction for prices is still lower. The average transactions price fell 9.9% y/y in October, while the MLS HPI dipped 0.8% y/y with downward momentum continuing on a month-to-month basis. The latter is now down eight months in a row, or an even 10% from the February high. With mortgage rates across the spectrum pushing above 5% as the Bank of Canada tightens further, this downward price discovery is probably going to persist well into next year.
Finally, it’s important to note that the above comments reflect conditions at the national level, and there are clearly pockets of the country where the market has deteriorated much more significantly. In Ontario, for example, the sales-to-new listings ratio has weakened to just above that 40% level. In some markets outside the core of the GTA, benchmark prices are easily down 15%-to-20% from their early-year highs already. It’s a similar situation in B.C. where, while Vancouver is correcting, markets 1-to-2 hours outside the core are doing so even faster—and none of this is a surprise given how sharply these exurban markets ballooned during the pandemic. Meantime, Atlantic Canada is holding up relatively well thanks to an ongoing population influx, while Alberta (and the Prairies more broadly) still look quite solid.
Table 1 - Canada — Existing Home Sales
(% change)
|
October 2022 |
m/m1 Sales |
y/y Sales |
y-t-d Sales |
y/y Prices |
y-t-d Prices |
|---|---|---|---|---|---|
|
Canada |
1.3 |
-36.0 |
-23.2 |
-9.9 |
4.3 |
|
Halifax |
9.2 |
-30.5 |
-25.3 |
7.8 |
18.8 |
|
Toronto |
0.2 |
-49.3 |
-36.5 |
-5.7 |
10.9 |
|
Montreal |
-2.4 |
-35.1 |
-18.9 |
-1.2 |
10.4 |
|
Winnipeg |
2.2 |
-29.6 |
-18.3 |
-0.5 |
9.9 |
|
Vancouver |
6.5 |
-45.7 |
-31.9 |
0.7 |
8.5 |
|
Ottawa |
-2.9 |
-41.4 |
-23.1 |
-2.5 |
7.9 |
|
Calgary |
0.2 |
-18.0 |
8.3 |
4.3 |
6.2 |
|
Edmonton |
3.3 |
-21.6 |
-0.8 |
-0.1 |
3.6 |
|
Regina |
-1.9 |
-4.6 |
-1.5 |
-4.9 |
-0.7 |
| MLS Home Price Index (national) | -0.8 |
16.4 |
|||
| 1(seasonally adjusted) | |||||
Source: BMO Economics, Haver Analytics, CREA
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Robert Kavcic
Director and Senior Economist
Robert has been with the Bank of Montreal since 2006. He plays a key role in analyzing economic, fiscal and real estate trends in Canada. Robert regularly contribut…(..)
View Full Profile >Tumbleweeds continued to blow across the Canadian housing market in October, with activity very depressed as the market continues to adjust to higher interest rates. But it could be worse. National home sales edged up 1.3% in October (seasonally adjusted), but were down 36% from a year ago. That still leaves activity volume below the low end of pre-COVID norms. As far as October goes, this was the quietest for unit volumes since the economy was climbing out of recession in 2010.
New listings rose 2.2% in the month and are down a modest 1.3% from a year ago. We’ll reiterate again that, while sales have swung wildly, new listings have held very steady through the recent turbulence and are very much in-line with pre-COVID norms. There’s just not a lot of forced selling out there at this stage, which can really exacerbate or speed up a price correction.
Still, the market balance is soft, with the sales-to-new listings ratio weakening slightly to 51.6% in October. That’s not a terrible number, as we tend to see recessionary conditions yield ratios below 40% (e.g., 2009 and the early-1990s). But, it is certainly leaving buyers with much more power. Meantime, the months’ supply of homes for sale at the current sales rate rose to 3.8, which is still relatively lean by historical standards.
So, we have a unique situation where demand has cracked and buyers can’t qualify for, or afford, early-year prices. But, outside some areas, there’s not a bounty of listings to choose from, and sellers are still able to say “no thanks” and pull listings. Think of it as a wide bid-ask spread that is making it very hard for the market to clear, and price discovery a relatively slow process. That said, the direction for prices is still lower. The average transactions price fell 9.9% y/y in October, while the MLS HPI dipped 0.8% y/y with downward momentum continuing on a month-to-month basis. The latter is now down eight months in a row, or an even 10% from the February high. With mortgage rates across the spectrum pushing above 5% as the Bank of Canada tightens further, this downward price discovery is probably going to persist well into next year.
Finally, it’s important to note that the above comments reflect conditions at the national level, and there are clearly pockets of the country where the market has deteriorated much more significantly. In Ontario, for example, the sales-to-new listings ratio has weakened to just above that 40% level. In some markets outside the core of the GTA, benchmark prices are easily down 15%-to-20% from their early-year highs already. It’s a similar situation in B.C. where, while Vancouver is correcting, markets 1-to-2 hours outside the core are doing so even faster—and none of this is a surprise given how sharply these exurban markets ballooned during the pandemic. Meantime, Atlantic Canada is holding up relatively well thanks to an ongoing population influx, while Alberta (and the Prairies more broadly) still look quite solid.
Table 1 - Canada — Existing Home Sales
(% change)
|
October 2022 |
m/m1 Sales |
y/y Sales |
y-t-d Sales |
y/y Prices |
y-t-d Prices |
|---|---|---|---|---|---|
|
Canada |
1.3 |
-36.0 |
-23.2 |
-9.9 |
4.3 |
|
Halifax |
9.2 |
-30.5 |
-25.3 |
7.8 |
18.8 |
|
Toronto |
0.2 |
-49.3 |
-36.5 |
-5.7 |
10.9 |
|
Montreal |
-2.4 |
-35.1 |
-18.9 |
-1.2 |
10.4 |
|
Winnipeg |
2.2 |
-29.6 |
-18.3 |
-0.5 |
9.9 |
|
Vancouver |
6.5 |
-45.7 |
-31.9 |
0.7 |
8.5 |
|
Ottawa |
-2.9 |
-41.4 |
-23.1 |
-2.5 |
7.9 |
|
Calgary |
0.2 |
-18.0 |
8.3 |
4.3 |
6.2 |
|
Edmonton |
3.3 |
-21.6 |
-0.8 |
-0.1 |
3.6 |
|
Regina |
-1.9 |
-4.6 |
-1.5 |
-4.9 |
-0.7 |
| MLS Home Price Index (national) | -0.8 |
16.4 |
|||
| 1(seasonally adjusted) | |||||
Source: BMO Economics, Haver Analytics, CREA
What to Read Next.
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The Canadian housing market got even quieter in September, as the adjustment to higher interest rates continues to work slowly through the system. …
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