Canadian Real Estate Prices Make Another Sharp Drop Despite Rising Sales

Canadian real estate prices have taken another steep dip, even as home sales showed signs of recovery. Recent data from the Canadian Real Estate Association (CREA) revealed that the national benchmark home price fell to $731,100 in October, a decline of 1.4% or $10,300 from the previous month. While this marks the fourth consecutive monthly drop, annual price growth is now just 1.1%, the lowest in years. Experts suggest that this trend could soon lead to year-over-year declines if the current trajectory continues.

The sharp price decreases come despite a surprising surge in sales, which rose 30% compared to the same period last year. Analysts point out that this uptick is unusual for October, a typically quieter time for real estate. It could be driven by factors like a return-to-office mandate for government employees or a short-lived adjustment in buyer sentiment. Still, the influx of new listings, which increased by 16%, has outpaced sales growth, adding further pressure on prices.

Since peaking in March 2022, Canadian home prices have dropped 17.4%—a staggering $151,300 in less than two years. This rapid decline reflects the market’s adjustment to higher interest rates, which have significantly raised borrowing costs for buyers. The drop is among the steepest corrections since the 2009 financial crisis, underscoring the challenges faced by sellers and homeowners navigating the new economic landscape.

The increase in inventory is another key factor contributing to falling prices. With over 70,000 homes listed for sale in October—one of the highest figures in decades—buyers have more options, reducing the urgency to bid aggressively. Meanwhile, sellers appear motivated to offload properties before further declines, creating a unique dynamic in the market.

Although the sales surge has created a momentary sense of activity, experts caution against interpreting this as a full recovery. Rising mortgage delinquencies and broader economic concerns could continue to weigh on the market. Some predict further price adjustments in the coming months, especially as the Bank of Canada holds firm on its high-interest rate policy.

The Canadian real estate market is now at a crossroads. While increased sales provide a glimmer of hope, the long-term outlook remains uncertain. Buyers and sellers alike are advised to proceed cautiously, as market conditions evolve and the full impact of economic policies becomes clearer.