By Ketki Saxena
Investing.com -- Home sales continued to slow in September, the Canadian Real Estate Association reported today. September sales were down 3.9% compared to August, and down 32.2% compared with a year ago. The number of newly listed homes was down 0.8% on a month-over-month basis in September.
“September was another month of lower sales activity, although, with many sellers also opting to play the waiting game, the market remains on the tighter side of the balanced market territory,” said Jill Oudil, Chair of CREA. “It makes for an interesting dynamic, one that doesn’t really have many historical precedents. The market has changed so much in the last year, and the adjustment to higher borrowing costs is still underway.”
Demand in the Canadian housing pandemic, red-hot during the pandemic, has slowed significantly since the Bank of Canada began its rate hike spree earlier this year. The Canadian central bank has raised interest rates from 0.25% earlier this year to their 3.25. Variable-rate mortgages at Canadian banks, which were at less than 2% at the beginning of the year, are now over 5% and set to rise still further.
The non-seasonally adjusted Aggregate Composite MLS® Home Price Index declined by 1.4% month-over-month but was still up 3.3% year-over-year. At its peak, the HPI recorded nearly 30% year over year gains in early 2022.
The report from CREA notes that looking forward, they “Expect MLS® HPI year-over-year comparisons to shift slightly into negative territory in the final months of this year, with declines becoming larger next spring – a year out from the peak.”
For the moment however, Shaun Cathcart, CREA’s Senior Economist, notes that “Resale markets may remain on the quiet side for some time yet, with the flipside of that coin being even more pressure on rental markets."