Canadian Existing Home Sales (October 2023)

Canadian home sales slide further in October 

• Canadian existing home sales declined 5.6% month-on-month (m/m) in October, leaving them 17% below their pre-pandemic level. Nation-wide sales were driven lower by outsized declines in Alberta (-8.3% m/m), B.C. (-6.9%) and Ontario (-5.5%), although they were down in nearly every province last month. 
• New listings declined 2.3% m/m in October, partially retracing September's surge. Still, they remained a touch above their long-term average. With sales dropping more than listings, the Canadian sales-to-new listings ratio sat at 49.5% last month – a 10 year low.   
• Canadian average home prices declined 1.1% m/m in October. By province, steep monthly declines were recorded in Newfoundland and Labrador (-3.8% m/m), Manitoba (-2.2%) and B.C. (-1.7%). Home prices were flat in Ontario, propped up by a 0.2% m/m gain in Toronto.
• The MLS home price index, a more "like for like" measure, declined by 0.8% m/m. Prices for detached units were down 1.1% m/m, versus a flat showing for condos. Detached price growth has been weaker than condos for the past few months.  

Key Implications

• Unsurprisingly, high interest rates continued to weigh on home sales last month. Notably, per capita sales are hanging around levels last recorded over 20 years ago. Although there's been some considerable relief on the rates front recently (the Canadian 5-year bond yield is down considerably from its early October peak) they remain elevated. This should continue to pressure demand in the near-term.
• Conditions very much favour buyers in B.C. and Ontario. In fact, Ontario's sales-to-new listings ratio is the lowest it's been since the Global Financial Crisis. This strongly suggests that prices will head lower in these two markets over the next several months, dragging down the nation-wide average price. That said, some relief should come next year as the Bank of Canada begins cutting rates.

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