Canada’s housing market saw renewed action this fall as temperatures cooled, thanks to a series of interest rate cuts by the Bank of Canada since June. Home resales surged nearly 10% nationwide over October and November, signaling a stronger recovery after a slow two-year period. By late 2023, activity returned to levels last seen in late 2019, just before the pandemic began.
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Home Resales Show Significant Growth
The jump in home resales across Canada reflects growing buyer confidence. While the overall market is on the upswing, the pace of growth remains measured. The possibility of further interest rate cuts in the coming months could entice more buyers into the market. However, significant affordability challenges are expected to moderate the pace of new entrants.
Regional Variations in Housing Market Activity
The Canadian housing market’s recovery has not been uniform across the country.
- Prairies, Quebec, and Atlantic Canada: These regions are experiencing higher activity levels, with many areas well above pre-pandemic benchmarks.
- British Columbia and Ontario: Despite solid back-to-back gains in cities like Vancouver and Toronto over the past two months, the recovery remains a work in progress. Deeper rate cuts will likely be needed to fully revitalize these markets.
Rising Supply of Homes Boosts Inventory Levels
Throughout 2023, the supply of homes for sale in Canada has steadily increased, leading to the highest inventory levels in four-and-a-half years. However, new listings declined in both October and November, tightening supply-demand conditions once again.
The national sales-to-new listings ratio reached 0.59 in November, suggesting upward pressure on home prices. This trend has been particularly evident in regions like the Prairies, Quebec, and Atlantic Canada, where property values have seen notable year-over-year gains.
Home Prices Begin to Rise Again
While some markets remained relatively softer earlier in the year, home prices across Canada began to pick up this fall.
- In Vancouver and Toronto, tighter market conditions drove price increases at the fastest monthly pace in over a year.
- Nationally, the composite MLS Home Price Index (HPI) rose 0.6% between October and November—the strongest monthly gain since July 2023.
Despite this recent growth, the national MLS HPI remains 1.2% lower compared to the same period in 2022. Nonetheless, the index is expected to rise further as the market’s recovery progresses into 2025.
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What to Expect in 2024 and Beyond
Looking ahead, gradual price appreciation is likely as the market continues its recovery. However, significant gains may depend on deeper interest rate cuts that restore housing affordability more meaningfully. The pace of growth is expected to remain steady, with opportunities for buyers and sellers alike as market conditions evolve in 2024.
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