The latest data from the Canadian Real Estate Association (CREA) reveals a 1.7% decrease in home sales in September compared to the previous month, marking the end of a five-month trend of rising sales. Across the country, 39,938 residential properties were sold last month, down from 40,615 in August.
The benchmark home price decreased by 0.1% on a monthly basis and by 3.4% year-over-year, with the national average home price standing at $676,154 for the month. Despite the Bank of Canada’s interest rate cut from 2.75% to 2.5% in September, sales declined.
CREA’s senior economist Shaun Cathcart noted that the last-minute rate cut could have a more significant impact on October sales figures, with potential further rate cuts in the future also expected to influence the market. While Greater Toronto and Winnipeg experienced increased sales, declines in Calgary, Edmonton, Ottawa, Montreal, and Vancouver contributed to the overall sales dip.
Previously, urban centers like Toronto lagged behind in sales activity while smaller cities and rural areas saw robust sales at record prices. Cathcart suggested that the slowdown in regional trends indicated by the September data may be temporary.
Despite the recent decline, Cathcart emphasized that the overall sales performance remains positive compared to previous years, with sales up by 5.2% from September 2024 and reaching the highest level for the month since 2021. He characterized the current situation as a minor setback rather than a significant drop.
Looking ahead, Cathcart highlighted ongoing challenges in housing supply in Canada. The supply of new homes decreased by 0.8% in September, with 4.4 months of inventory available, below the long-term benchmark of five months. Cathcart emphasized the need for aggressive housing construction to prevent a scenario where prices surge due to inadequate supply.
In conclusion, policymakers are urged to prioritize housing development to address the persistent supply shortage and mitigate potential rapid price escalation.