Canadian Existing Home Sales (October 2024)

Canadian home sales surge in October 

• Canadian existing home sales vaulted higher by 7.7% month-on-month (m/m) in October. This pushed sales slightly above their pre-pandemic level for the first time since the beginning stages of the Bank of Canada's tightening campaign in early 2022. Nation-wide, sales were driven higher by gains in B.C. (+15.3% m/m) and Ontario (+8.9% m/m), although sales were higher in every province except Manitoba (where they were flat). 
• New listings declined 3.5% m/m in October, although they remain a touch above their long-term average. The combination of soaring sales and falling listings significantly tightened markets, with the sales-to-new listings ratio rising 6 ppts to 58.0% - effectively at its long-run average. There were 174.5k properties listed for sale in October, up 11% from a year earlier.
• Canadian average home prices increased 2.2% m/m in October. By province, relatively strong gains were recorded in Manitoba (2.4% m/m) and Ontario (2.1% m/m). Price growth averaged +0.7% m/m across the other "Big 4" provinces. In contrast, declines were recorded in Saskatchewan (-2% m/m) and New Brunswick (-1.4% m/m). 
• The MLS home price index, a more "like for like" measure, declined by 0.1% m/m. Prices for detached units were flat, while condo prices fell 0.3% m/m. The latter was down 4.5% year-on-year, versus a smaller 2.1% drop for detached homes.  

Key Implications

• Last month, markets finally responded to the rush of rate relief in the system. There had also been some thought that the 50-bps rate cut by the Bank of Canada in October would help change the psychology of a previously subdued market, although it happened later in the month. Supply gains in recent months may have also helped by improving buyer choice. 
• Even with heady October sales gains, considerable pent-up demand likely still exists in B.C. and Ontario. This should help drive Canadian sales higher through next year, especially with interest rates slated to drop further and stimulative federal policies set to roll out.  
• Last month, Canadian average price growth was boosted by compositional forces (i.e., firmer performances in more expensive regions). Stripping away this impact by looking at benchmark prices reveals a much more subdued price backdrop, particularly in B.C. and Ontario where supply/demand balances are still relatively loose. However, markets are much tighter elsewhere in the country, pointing to continued gains. 

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