TORONTO — Home sales, prices and listings fell in November from a month earlier as many potential buyers and sellers hunkered down to wait for signs of relief on interest rates, the Canadian Real Estate Association said Thursday.
Sales fell 0.9 per cent compared with November last year, and fell by the same amount on a seasonally adjusted basis compared with October.
New listings dropped 1.8 per cent in November compared with a month earlier, the second month of declining listings after a 2.2 per cent drop in October that marked the first pullback since March.
The drop in new listings shows sellers are increasingly holding off until next year, despite a surprising number of whom entered the market in early fall, CREA senior economist Shaun Cathcart said in a release.
"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."
Average home prices dipped 0.3 per cent from the previous month, or 1.1 per cent based on the MLS home price index, while the index showed a 0.6 per cent increase from last year to come in at $735,500.
The actual national average price of a home sold in November was $646,134, up two per cent from November 2022
Cathcart said owners holding back on listing was probably wise.
"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."
The Bank of Canada has held rates unchanged over three rounds of decisions, but has said it could still raise rates even as forecasters expect the next move would be a cut.
On Wednesday, the U.S. Federal Reserve kept its rate unchanged, but signalled that it expects to make three quarter-point cuts to their benchmark rate next year.
Mortgage rates declined in November, but it hasn't been enough to boost the market, TD economist Rishi Sondhi said in a note.
"Even with rates falling last month, they were still at elevated levels, which was enough to weigh down housing sales," he said.
Overall home sales are 18 per cent below their pre-pandemic level, with outsized declines this past month from Manitoba, B.C., and Quebec while Ontario saw notable sales growth, Sondhi said.
Despite Ontario gains, conditions in the province still favour sellers and, like in B.C., could lead to price discounts in the months ahead, he said.
"Notably, markets are much tighter elsewhere in the country, which should lead to relatively strong price growth moving forward."
While sales are well below historic norms, inventory also remains subdued at 4.2 months of inventory, below the long-term average of almost five months, noted Dominion Lending Centres chief economist Sherry Cooper.
She said in a note that while it will likely be several months before the Bank of Canada cuts rates, market-driven interest rates have fallen sharply and fixed mortgage rates have also come down but more moderately. She said she expects the overnight rate to come down by one per cent by the end 2024.
"Housing activity will strengthen in 2024 and 2025, although the economy will be burdened by a substantial rise in monthly mortgage payments as many renewals or refinancings rise, peaking in 2026."
Royal LePage also expects rate cuts to fuel a rebound in the market, predicting in its 2024 outlook out Thursday that the national aggregate home price will rise 5.5 per cent year-over-year in the fourth quarter next year.
CREA chair Larry Cerqua said that overall, the market look to be stabilizing into balanced territory with a soft-landing increasingly in sight.
"I wouldn’t expect anything too headline-grabbing from the resale housing market for the next few months."
This report by The Canadian Press was first published Dec. 14, 2023.
Ian Bickis, The Canadian Press
