Canadian home sales fall for 3rd month; full-year forecast lowered

CANADIAN home sales fell for a third straight month in September and the industry group that produces the data downgraded its forecast for the full year, anticipating that interest rates will stay at elevated levels for longer than previously thought.

The Canadian Real Estate Association (Crea) forecast on Friday (Oct 13) that sales would decline 9.8 per cent this year from 2022 to 449,614 properties, compared with a 6.8 per cent decline expected in July, mostly down to fewer expected sales in Ontario and British Columbia.

The forecast for the national average home price was also downgraded, with Crea expecting an annual decline of 3.3 per cent to US$497,614.

Weaker sales and pricing trends since the summer, along with “softer market conditions going forward and ‘higher for longer’ interest rates,” weighed on the forecast, Crea said in a statement.

The Bank of Canada left its policy rate on hold last month after lifting it in July to a 22-year high of 5 per cent. Money markets are leaning toward one more tightening over the coming months.

Data from CREA showed on Friday that Canadian home sales fell 1.9 per cent in September from August, the third consecutive month of declines, and were up 1.9 per cent on an annual basis.

The industry group’s Home Price Index edged down 0.3 per cent on the month and was up 1.1 per cent annually, while the national average selling price was up 2.5 per cent on the year.

“The recent trend of slowing sales and rising new listings continued in September,” said Larry Cerqua, chair of Crea.

“This presents an opportunity for buyers, although many of them seem content to stick to the sidelines until there’s more evidence that interest rates are indeed finally at the top.”

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Crea projected that sales will rebound by 9 per cent in 2024 as the prospect of lower interest rates comes into view. REUTERS