Canadian Existing Home Sales (October 2021)

Canadian housing market heated up in October

  • Canadian existing home sales jumped by 8.6% m/m in October, clocking in at a robust 53.7k units.
  • Provincially, gains were relatively broad-based with sales up in 7 of ten provinces. Leading the way were Manitoba (+16.0% m/m) and Saskatchewan (10.2%). Sales were also higher in Ontario (9.7%), Alberta (9.4%), B.C. (8.6%), and Quebec (7.6%).
  • New listings advanced at a decent 3.2% m/m clip. However, the stronger gain in sales resulted in tighter markets, with the sales-to-new-listings ratio climbing to 79.5% from 75.5%. Meanwhile, the months' supply of inventory fell to a near-record low of 1.9 months. 
  • Canadian average home prices surged 2.6% m/m in October, building on August's solid 1.3% monthly gain. Prices were higher in every province, paced by PEI (5.9%), and Manitoba (5.8%). In the larger provinces, prices were up by 3.0% m/m in B.C., 2.4% m/m in Quebec, 1.9% m/m in Ontario and 1.5% m/m in Alberta.
  • The MLS home price index, a more "like for like" measure, leapt 2.7% higher m/m, the fastest rise since March. Prices for both single-family and condo units advanced by 2.7% m/m in October. Single-family home price growth is re-accelerating, rising 26.2% y/y - the steepest gain since July. Apartment prices continued to climb in year-on-year terms, rising by 14.9% - the fastest growth since March 2018.  

Key Implications

  • This was a strong report that reinforced the fact that the housing market still carries significant momentum. In addition, October's solid showing probably didn't receive much of a boost from buyers pulling forward purchases ahead of higher rates, as the Bank of Canada didn’t communicate its more hawkish tone until very end of the month.
  • It will take further interest rate increases to meaningfully moderate demand, and they should be on the way. However, sales levels are likely to remain healthy through next year, supported by firm economic and income growth, a rising population and elevated household savings (some of which should flow into down payments). Also, a large chunk of the population has aged into what has historically been prime homebuying years.
  • On the supply side, while new listings saw a nice gain in October, it has generally been flat for the past several years and has struggled to keep up with pandemic-era demand. This relative lack of supply may be preventing even stronger sales growth, while helping keep resale markets drum tight. In addition, even markets for newly built homes are tight. In this environment, prices should continue to climb next year even as rates push higher.   

Disclaimer

This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.
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