In September, the number of residential properties sold in Canada decreased by 1.7% compared to the previous month, marking the end of a five-month trend of rising sales activity, as per the latest data from the Canadian Real Estate Association (CREA). A total of 39,938 homes were sold nationwide last month, down from 40,615 sales in August. The benchmark home price experienced a slight 0.1% decline on a monthly basis and a 3.4% decrease 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, the decline in sales occurred. CREA’s senior economist, Shaun Cathcart, mentioned that the anticipation of the rate cut was unclear until the last minute, suggesting that its impact might be more apparent in October’s sales data. Further rate cuts by the central bank in the upcoming months could have significant future implications.
Regionally, while the Greater Toronto Area and Winnipeg witnessed increased sales, Calgary, Edmonton, Ottawa, Montreal, and the Vancouver area experienced declines, contributing to the overall drop in sales, according to CREA. Previously, urban centers like Toronto had lagged in sales activity, while smaller cities and rural areas thrived with high sales at record prices. Cathcart noted that the September shift may signify a slowdown in these regional trends.
Despite the recent drop, Cathcart emphasized that the decline is not severe in the bigger picture. Sales remain higher compared to previous years, showing a 5.2% increase from September 2024 and the highest number of September sales since 2021. He described the current situation as a temporary setback rather than a long-term trend.
Looking ahead, Cathcart highlighted the ongoing challenges Canada faces in terms of housing supply. The data revealed a 0.8% decrease in the supply of new homes in September compared to the prior month, with a total inventory of 4.4 months available (compared to the long-term average of five months). To prevent rapid price increases due to insufficient housing, Cathcart urged policymakers to prioritize aggressive housing construction efforts.
Overall, addressing the housing supply shortage promptly is crucial to avoid exacerbating the demand-supply imbalance in the Canadian real estate market.