Canadian home sales took another hit in November, and it seems more and more sellers are getting the hint, wanting to hold off on listing their homes until next year when rate cuts and motivated buyers will (hopefully) return.
Sales edged down 0.9% both month over month and year over year in November, according to new data from the Canadian Real Estate Association (CREA). Although this is just one of many monthly declines in transactions seen in 2023, it's notably the smallest decline since July.
At the same time, the number of new listings fell 1.8% month over month in November, which followed a 2.2% drop in October. Prior to that, listing levels had seen a promising increase in many markets.
"While it was clear from about August that a lot of buyers were probably going to head back to the sidelines until at least next spring, a surprising number of sellers nonetheless chose to try their luck this fall," said Shaun Cathcart, CREA’s Senior Economist.
"Not getting offers they were willing to accept, it’s looking like many of them are also now resigned to hunker down until next year. It’s probably a good move given that recent expectations around interest rate cuts suggest it might be a somewhat more active spring market than we thought."
With the drop in listings outpacing the drop in sales, the national sales-to-new-listings ratio tightened somewhat to 49.8%, up slightly from 49.4% in October. Although this marked the first time the measure has increased since April, it is still solidly below the long-term average of 55.1%.
By the end of November, there were 4.2 months of inventory across Canada, which is up a tick from the 4.1 months seen at the end of October. Although this measure looks to be stabilizing, CREA says, it's "still almost a full month below its long-term average of near five months of inventory."
Even as conditions tightened, prices continued to slip, with the Aggregate Composite MLS Home Price Index falling 1.1% from October to November. CREA notes, however, that prices often react with a slight lag, so December may see that decline get smaller or, at the very least, stop getting larger.
Price declines have largely taken place in Ontario in recent months, but prices are now starting to soften in other areas like the Fraser Valley, Winnipeg, and Halifax. On the flip side, areas like Alberta, Saskatchewan, New Brunswick, Prince Edward Island and Newfoundland are seeing prices continuing to climb.
On a year-over-year basis, the national average home price in November of $646,134 was up 2% from the same time last year.
Looking ahead as buyers eagerly await either a meaningful drop in prices or some relief-bringing rate cuts, CREA Chair Larry Cerqua says he "wouldn’t expect anything too headline-grabbing from the resale housing market for the next few months."
"That’s a good thing," Cerqua adds, "because a market that looks to be stabilizing in balanced territory increasingly suggests the soft-landing scenario."
