A for sale sign is displayed in front of a house in Toronto's Riverdale neighbourhood in this file photo.Evan Buhler/The Canadian Press
Canada’s housing market slowed further in November, with sales and prices falling as would-be buyers continued to struggle with higher borrowing costs.
The number of resale transactions fell 0.9 per cent from October to November, the fifth straight month of declines, according to the Canadian Real Estate Association (CREA).
The home price index, which excludes the priciest purchases, was $735,500 in November. That was 1.1 per cent lower than October, and the third consecutive month of decreases. Compared with November, 2022, the national home price index was 0.7 per cent higher.
Since the Bank of Canada’s back-to-back interest rate hikes in the summer, activity slowed after a brief rebound in the spring when the central bank had said it would take a break from raising interest rates.
“Typically when the market gets spooked mid-year things tend to shut down until the next spring,” said Shaun Cathcart, CREA’s chief economist.
Even though the Bank of Canada has kept the benchmark interest rate at 5 per cent for the past three rate announcements, the central bank continues to say it is prepared to raise them “further if needed.” That has created uncertainty for potential buyers who do not want to make a purchase without knowing the direction of interest rates.
Mr. Cathcart said the central bank has been reining in expectations for an interest rate cut: “That is what consumers see and hear.”
As well, even if potential buyers are prepared to make a purchase, many cannot afford the current mortgage prices. The popular five-year fixed mortgage is around 6 per cent, which is up from 5.19 per cent in March, according to analysis firm Mortgagelogic.news.
Homeowners have started to pull back on listing their homes. New listings were down 1.8 per cent from October to November, the second month of declines after a brief surge over the summer and fall.
An increase in new listings can suggest that some homeowners have to sell their properties because they cannot make their mortgage payments. But CREA has said that if homeowners are forced to sell, there would typically be more sales and steeper price declines.
Now that new listings are falling, this suggests that homeowners are not forced to sell and are choosing to hold onto their properties until there are more buyers.
The biggest monthly price declines were mostly in the Toronto suburbs and nearby cities. In Cambridge, the home price index was down 3 per cent from October to November. The index was down at least 2 per cent in Oakville, Milton, London, Kitchener-Waterloo, Guelph, Hamilton and Burlington.
No custom component found for subtype: oovvuu-video