The deep declines that have defined the housing market since the spring appear to have stabilized in October, with both home sales and prices enjoying a slight rally.
The latest data from the Canadian Real Estate Association (CREA) reveals a total of 35,380 transactions occurred last month - still a 36% drop from an annual perspective, but up 1.3% from September, breaking a seven-month trend of consecutive decreases.
“October provided another month’s worth of data suggesting the slow down in Canadian housing markets is winding up,” said Shaun Cathcart, CREA’s Senior Economist. “Sales actually popped up from September to October, and the decline in prices on a month-to-month basis got smaller for the fourth month in a row."
The data shows sales perked up in 60% of local markets across the nation, “although both gains and declines were generally small across the board.” The largest uptick was in Greater Vancouver at 6%, while Montreal sales fell the most, with a -2.4% decrease.
The average sale price clocked in at $644,643, marking a -9.9% decline from the same month in 2021, and a deeper YoY drop compared to the -6.6% recorded in September. The losses were less severe on a short-term basis though, edging down just -0.6%. Compared to the -1.2% seen between August and September, this indicates prices have held relatively firm. The MLS Home Price Index dipped -1.2% MoM, the smallest decline since June.
According to CREA, removing Toronto and Vancouver from the average would pare it down by $125,000, to $519,643.
Compared to the market peak in February, the average home price is down 21% (reflecting a dollar amount of -$172,077), with sales -39.2% below late winter levels.
Some good news for those currently searching for a home -- the number of new listings crept up by 2.2% from September, a turnaround from the -0.8% decline recorded in September, showing sellers are slowing coming out of the woodwork. However, the national market remains ensnared in some of the tightest inventory conditions ever seen, with just 3.8 months on deck. That’s up slightly from the 3.7 months left at the end of September (and the record low 1.7 months seen at the beginning of the year), but well below the long term average of five months.
As the number of listings increased more than the pace of sales, the market became slightly more buyer-friendly; the sales-to-new-listings ratio, which reflects the level of competition in the market, eased down to 51.6% from 52% last mont. That's well within balanced territory and below the long term average of 51.6%. CREA says listings recovered the most in the Greater Toronto Area markets and the BC Lower Mainland, offsetting declines in Montreal and Halifax-Dartmouth.
While the month’s improvements have been modest, they do signal that market doldrums are starting to reverse, says Jill Oudil, Chair of CREA.
“In October, sales across the country increased for the first time since before interest rates started to rise last winter,” she said. “Of course, we’ve known the demand was there, so it’s just been a matter of some playing the waiting game as borrowing costs and prices have adjusted. Moving into 2023, sellers and buyers will likely continue coming off the sidelines, but it’s a very different market compared to just one year ago.”