National home sales rise 30% in October
October 2024 CREA update
After what has been a fairly quiet year for real estate sales, home buyers have returned to the market in force this autumn, with the national October data revealing a whopping 30% year-over-year surge in transactions.
According to the Canadian Real Estate Association (CREA), a total of 44,041 properties traded hands over the course of the month, also marking a 7.7% increase from September. That’s the highest level of activity seen since April 2022, before the effects of the Bank of Canada’s 10-part rate hiking cycle chilled the market. Totalling all of the sales that have occurred so far this year, transactions sit 5.6% higher than they did at the same point in 2023.
Much of the sales recovery was concentrated in Canada’s biggest markets, with the Greater Toronto Area and British Columbia’s Lower Mainland both seeing double-digit increases, up 43.3% and 32.4%, respectively.
Lower mortgage rates are boosting sales
Lower interest rates and the increase of newly-listed homes earlier this fall are what’s enticing home buyers back into the market after months of inaction; many have been delaying their home purchases as interest rates sat at historic highs throughout 2023 and the first half of this year.
However, the Bank of Canada has started to lower the overall cost of borrowing in Canada, cutting its benchmark interest rate a total of four times since June, and delivering an extra-large half-point decrease on October 23. Another cut is anticipated in the central bank’s next announcement on December 11, and potentially several more throughout 2025.
“The jump in home sales last month was definitely an October surprise, although with the big interest rate cut of 50 basis points announced during the last week of the month, the increase was more likely related to the surge in new listings we saw in September,” said Shaun Cathcart, CREA’s Senior Economist. “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. 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.”
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Housing market still in affordability sweet spot
Market conditions have yet to truly heat up, though, offering today’s active home buyer a sweet spot in terms of affordability and choice; home price growth has been flat, and abundant supply has led to balanced market conditions in most of Canada’s local markets.
The average home price came to $696,166 in October, up 6% from last year, and 2.2% on a monthly basis. However, the MLS Home Price Index (HPI), which reflects the most typical type of home sold with the extremes stripped out, dipped 0.1% from September, and 2.7% on a year-over-year basis. According to CREA, “the bigger picture is that prices at the national level have remained mostly flat since the beginning of the year.”
The number of properties brought to market in October was slightly lower (-3.5%) than in September, at a total of 75,615 new listings. However, CREA points out that follows a 4.8% jump in September, which has brought new supply levels to their highest since mid-2022.
Overall, there were 174,458 properties available for sale in Canada by the end of October, up 11.4% from a year earlier.
However, there are signs that supply is starting to tighten up. The number of months of inventory (the amount of time it would take to fully sell off all homes available for sale under current market conditions), sat at 3.7, down from 4.1 in September. According to CREA, the long- term average is 5.1 months of inventory, with a seller’s market being below about 3.6 months and a buyer’s market being above 6.5 months.
The market remains balanced – for now
While conditions are currently balanced between buyers and sellers, there are also early indications that the scale will tip in the coming months. As sales increased while new listings dropped, the sales-to-new-listings ratio (SNLR) – which measures the level of buyer competition in the market – rose to 58%, a considerable jump from 52% in September. That’s now higher than the long-term average of 55%. (CREA considers an SNLR 45% and 65% to indicate a balanced housing market.)
It will be the supply of new listings that will determine how the market continues to shape up, states CREA Chair, James Mabey, in the association’s release.
“October’s strong sales numbers across Canada 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,” he says. “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.”
The bottom line
It’s clear that lower mortgage rates are incentivizing home buyers to enter the market. Given additional rate cuts are expected in the coming months, that will likely heat demand further, potentially increasing prices if new supply doesn’t keep pace. While the December BoC announcement will provide more insight as to where rates are going, all signs point to a brisk January market, setting the stage for a hot spring selling season.
The next CREA report comes out on December 16, 2024.
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Penelope Graham, Head of Content
Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.