Canadian home sales decline as high interest rates curb demand

OTTAWA – Canada’s housing market saw a notable decrease in existing home sales, dropping by 5.6% in October, as higher interest rates continue to cool down what was once a fervent sector during the pandemic. This latest decline echoes a previous dip in June 2022 when sales fell by 6.4%, underscoring the impact of the Bank of Canada’s aggressive rate hikes on consumer spending.

Industry experts have observed a marked reduction in buyer activity, with Larry Cerqua noting a significant drop in potential homebuyers. John Pasalis pointed out record-low sales of detached homes in Toronto, highlighting how the country’s largest city is not immune to the nationwide trend. The Bank of Canada’s sustained campaign of raising borrowing costs has resulted in some of the highest interest rates seen in over two decades, leading to an economic slowdown with the housing market among the hardest hit sectors.

Despite the monthly decrease in home sales, national data indicates house prices have seen slight monthly decreases but annual increases, with notable gains over three- and five-year periods. However, new home listings also declined by 2.3%, contributing to a sales-to-new listings ratio that has fallen to a 10-year low of 49.5%. This figure is significantly below the long-term average of 55.1% and well beneath the peak of 67.9% witnessed in April, signaling a shift from a seller’s to a more balanced or even buyer’s market.

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