Canadian Home Sales Reach Highest Level Since April 2022

Canadian home sales recently reached their highest level since April 2022, with a 7.7% increase in October compared to the previous month. This growth highlights a significant resurgence in the market, particularly after months of cautious activity driven by higher borrowing costs. The Canadian Real Estate Association (CREA) attributes this uptick to pent-up demand, as many buyers returned to the market after sitting on the sidelines.

However, a critical challenge remains: the supply of homes is dwindling. New listings dropped by 3.5% in October, which tightened the sales-to-new-listings ratio to 58%. With only 3.7 months of inventory available nationwide, the market has edged closer to a seller’s market. These inventory levels are at their lowest point in over a year, well below the long-term average of five months.

Home prices have also been affected by this competitive environment. The national average price of a home rose to $696,166 in October, marking a 6% year-over-year increase. While the MLS® Home Price Index showed relatively stable prices overall, the ongoing supply-demand imbalance continues to drive regional disparities, with higher costs in major urban areas like Toronto and Vancouver skewing the national figures upward.

Falling interest rates since the summer have further encouraged buyers to re-enter the market. Many are capitalizing on these lower rates to secure homes, adding to the surge in activity. CREA experts note that this positive trend could persist into early 2024, but its sustainability depends on the availability of new listings to meet growing demand.

Market analysts are cautiously optimistic about the balance of supply and demand. The steady growth in sales, paired with persistent supply constraints, emphasizes the need for new housing developments. Experts believe that without increased housing stock, the market will remain tight, making it difficult to achieve long-term affordability for Canadian families.

The outlook for the housing market hinges on several factors, including economic stability and policy measures to address supply shortages. October’s strong sales figures provide hope for recovery, but the challenges of affordability and limited inventory persist. Analysts stress the importance of collaboration among policymakers, developers, and communities to ensure that housing needs across Canada are met in the years ahead.