Home prices continued to fall in September, marking the seventh consecutive month of declines, according to the Canadian Real Estate Association.
In seasonally adjusted terms, prices were down 1.4% from August, but remain 3.3% above year-ago levels, CREA reported.
The actual (not seasonally adjusted) price stood at $640,479 in September. That’s up 0.4% from August, but down 6.6% from a year ago.
Home sales fell another 3.9% on a monthly basis, although CREA notes the month-over-month declines have been progressively smaller from May through August. Sales are now down 32% from a year ago.
“September was another month of lower sales activity, although, with many sellers also opting to play the waiting game, the market remains on the tighter side of balanced market territory,” said CREA chair Jill Oudil. “It makes for an interesting dynamic, one that doesn’t really have many historical precedents.”
New listings were down another 0.8% month-over-month, building on the 6.1% and 49% declines posted in July and August, respectively, CREA noted, “as some sellers appear content to stay on the sidelines until more buyers are ready to get back into the market.”
Months of inventory continued to improve slightly, rising to 3.7 months. That’s up from 3.5 in August and a record low of 1.6 earlier this year.
Ontario once again felt the brunt of home price declines, followed to a lesser extent by British Columbia, CREA noted. It also noted that prices are “sliding sideways” in Prairie cities like Calgary, Regina and Edmonton, while price softness in the Atlantic region is now showing in parts of New Brunswick and Newfoundland and Labrador.
Removing the high-priced markets of the Greater Toronto and Vancouver areas, the average price stands at $523,479.
Cross-country roundup of home prices
Here’s a look at select provincial and municipal average house prices as of September, with their annual and monthly changes.
|Location||Average Price||Annual price change||Month-over-month change|
|Barrie & District||$800,900||-0.2%||-3.5%|
It’s important to note that some of the movements in the table above may be somewhat misleading, since average prices simply take the total dollar value of sales in a month and divide it by the total number of units sold. The MLS Home Price Index, on the other hand, accounts for differences in house type and size.
On a seasonally adjusted basis, the MLS HPI for Toronto has fallen 9.2% ($118,000) since February, while Vancouver’s HPI is down 5.7% ($71,000) from its peak.
No signs of a bottom, says RBC
The latest data from CREA “gave few indications the bottom is near,” noted RBC economist Robert Hogue.
“Both activity and prices continued to trend lower in the vast majority of local markets, he wrote, adding that demand-supply conditions continued to ease, and should continue to do so with more interest rate hikes on the horizon.
“Rising rates will intensify affordability issues in the near term and sustain heavy downward pressure on home prices,” Hogue added. “We expect benchmark prices will fall approximately 14% nationwide by next spring from the recent peak.”
He sees steeper declines likely in Ontario and B.C. (-16%), with more mild corrections expected in Alberta and Saskatchewan (-4%).
TD economist James Orlando noted that with listings down for a third straight month, it indicates the softening economy and higher interest rates “have yet to force a meaningful increase in supply,” and may actually be encouraging more potential sellers to remain on the sidelines.
He added that more downside risk exists for home sales and prices as the Bank of Canada continues to take the policy rate higher.
“When the dust settles, we expect Canadian home sales to have dropped by about 35% from 2022Q1 through 2023Q1, with a 22% decline in average home prices over the same period,” he wrote.