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The ratio of nationwide sales to new listings is below the long-term average for the first time since January
Published on October 13, 2023 • Last updated 6 hours ago • 3 minutes reading time
A “For Sale” sign is posted outside a home in Toronto’s Riverdale neighborhood. Photo by Evan Buhler/The Canadian Press Files
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The slowdown in real estate markets in Ontario and British Columbia has led the Canadian Real Estate Association to lower its national average home price forecast for 2023.
In an Oct. 13 news release, CREA said it now expects the state average to fall 3.3 percent for the year to $680,686. In July, CREA had raised its home price forecast to $702,409 – almost unchanged at 2022 levels – after a stronger-than-expected spring season.
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The downward revision came after Canadian home sales fell slightly in September compared to the previous month and new listings rose sharply, putting the national sales-to-new listings ratio below its long-term average for the first time since January, according to monthly data from CREA.
A lower sales-to-offers ratio is considered an indicator of weakness in the market and may give buyers the upper hand.
Sales fell 1.9 percent this month compared to August, but were 1.9 percent higher than in September 2022. Meanwhile, new registrations rose 6.3 percent compared to the previous month. The ratio of sales to new listings fell to 51.4 percent from 55.7 percent in August, below the long-term average of 55.2 percent.
The MLS Home Price Index (HPI) fell slightly by 0.3 percent month-over-month, but is still up 1.1 percent year-over-year. The national average sales price, excluding seasonal adjustment, increased 2.5 percent to $655,507 compared to the same month last year.
Lower sales in the Greater Vancouver and Greater Toronto areas were offset by increases in Edmonton, Montreal and the Kitchener-Waterloo region.
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“The recent trend of declining sales and increasing new registrations continued in September,” CREA Chairman Larry Cerqua said in the release. “This represents an opportunity for buyers, although many of them appear content to stay on the sidelines until there is more evidence that interest rates have indeed finally peaked.” Combined with sellers who are largely and Not having to sell the whole thing means the market is likely to remain on the slower side until next year.”
For 2024, CREA expects an increase of 1.5 percent to $690,916. This means the national average price would remain in the $680,000 to $700,000 range for the fourth year in a row, a trend seen in previous periods such as 2016-2019 and the 1990s.
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CREA’s data also suggests that Alberta will continue to be a bright spot for housing construction next year.
“Alberta prices are expected to outperform the rest of Canada in 2024, with a projected increase of 4.8 per cent compared to 2023,” CREA said in the release. “In contrast, Ontario is expected to see virtually no price growth next year (0.2 per cent). Moderate price growth in the range of 1 to 2.5 percent is forecast for other provinces in 2024.”
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CREA said it is monitoring the economy and interest rates for changes that could alter these forecasts.
“The biggest risk to this forecast remains what happens to the data the Bank of Canada is keeping an eye on and what that means for its key interest rate through next spring,” CREA said. “The current view is that there will be either no increase or at most one further increase, along with some indication from the bank that the next step is likely to be downwards at some point.”
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