The Canadian Real Estate Association says the number of homes sold in October rose 30 per cent compared with a year ago, marking a shift from the market’s holding pattern.
On a seasonally adjusted month-over-month basis, national home sales rose 7.7 per cent from September, as 44,041 residential properties changed hands last month across Canada.
The association said rising home sales activity was broad based, with the Greater Toronto Area and British Columbia’s Lower Mainland recording double-digit increases in October.
CREA senior economist Shaun Cathcart called the jump in sales a “surprise,” even as the Bank of Canada continues to lower its key interest rate.
The central bank has lowered its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
Jason Ralph, broker of record for Royal LePage Team Realty in Ottawa, said activity often picks up in the fall, but surpassed his expectations last month.
Still, he said the market rebound seems to be happening gradually, rather than all at once. He attributed that trend to the Bank of Canada’s messaging surrounding its rate cut cycle.
“There’s not going to be this massive rush to the market like we saw in the pandemic. That was an anomaly,” said Ralph.
“The 50-basis-point drop was enough to push some people on the sidelines into the market where they found it enticing enough to jump in, but it wasn’t that massive wave that everybody’s waiting on because the messaging is, ‘We’re lowering it and we’re likely going to lower it again.'”
Cathcart said the sales increase last month was more likely related to the surge in new listings that hit the market in September. That month saw a 4.8 per cent increase in new homes on the market, pushing supply to some of the highest levels seen since mid-2022.
“There probably won’t be another rush of new supply like that until next spring, and at that point, mortgage rates should be close to their expected lows, as well,” said Cathcart in a press release.
“With that in mind, you can think of the October numbers as a sort of preview for what we might expect to see next year.”
CREA chair James Mabey added that October’s strong sales numbers “suggest buyers have been in the market since rates began to fall in early summer, but they were waiting for the right property to come up for sale, which didn’t happen in a big way until September.”
“The extent to which that will be able to continue between now and next spring will depend on the number of listings coming onto the market,” he said.
In October, the number of newly listed properties was down 3.5 per cent month-over-month. The association said the national pullback was led by a drop in new supply in Greater Toronto.
There were 174,458 properties listed for sale across the country at the end of the month, up 11.4 per cent from a year earlier but still below historical averages for that time of year.
The national average sale price for October amounted to $696,166, up six per cent compared with a year earlier.
Ralph said that with property prices expected to increase amid more demand, would-be sellers are growing more confident to list, while potential buyers are feeling more comfortable paying current prices.
“Buyers have been sort of going, ‘Well, where’s my deal?’ And sellers have been going, ‘Well, I still want my price.’ So we’ve been having a little bit of a game between buyers and sellers,” he said.
“I think we’re seeing a little bit more movement as people understand that as rates come down, prices are steady and probably going to go back up.”
BMO senior economist Robert Kavcic said the sales figures show Canada’s housing market “is finding some life.”
“Sales volumes have bounced from last year’s lows, prices have stabilized across many regions and outright buyers’ markets are disappearing,” he said in a note.
“To be fair, last October and November were very soft after accounting for seasonality, but it’s clear that activity has risen with more selection and lower borrowing costs. Price reductions across some segments have also allowed the market to clear better as the ‘bid-ask’ spread narrows.”
This report by The Canadian Press was first published Nov. 15, 2024.
