September Home Sales Decline in Nearly 70% of Local Markets Across Canada

It appears higher borrowing costs and tighter lending conditions are working their way through the Canadian housing market. Per The Royal Bank of Canada housing has not been this unaffordable since 1990. As a result, sales activity has slowed significantly, total home sales across the nation fell 9% year over year in September. It was the fewest sales for the month of September in six years. According to the Canadian Real Estate Association, home buyers retreated across the country, “About 70% of local markets were down on a y-o-y basis, led primarily by declines in major urban centres in British Columbia, along with Calgary, Edmonton and Winnipeg.”

Meanwhile, active listings across the nation ticked higher by 2% year over year, bringing the national sales-to-new listings ratio to 54.4% in September compared to 56.2% in July and August. The long-term average for this measure of market balance is 53.4%. As a result of fewer sales and rising inventory, the average sales price remained virtually unchanged from September 2017, increasing just 0.2%, or negative when adjusted for inflation. The MLS Home Price Index Benchmark Price suggested a more rosy outlook, showing a slight gain of 2.28%. Price inflation topped out in Victoria +9%, and Ottawa at +7%.

As home sales stall and prices decelerate rather quickly, the uncertainty appears to be worrying the real estate development community. According to the most recent data from CMHC, “The national trend in housing starts stood at a 19-month low in September, following declines in four of the last five months, The slowdown in the pace of new residential construction activity in recent months is a result of both lower single-detached and multi-starts activity and brings new residential construction closer to its long run average from the elevated levels registered in 2017.” Across Canada, the seasonally adjusted annual rate of housing starts slipped by 5% from August to September.