Last Friday, the Canadian Real Estate Association (CREA) reported that housing market activity in Canada surged higher in October, surprising many industry insiders. Canadian real estate market activity has been relatively muted in 2024 amid high borrowing costs and elevated home prices. However, activity is expected to eventually pick up as the Bank of Canada (BoC) continues to lower interest rates, moving more potential purchasers into the market. October’s data could be a precursor to better activity ahead.

• CREA says sales of existing homes in Canada rose by 7.7% in October over the previous month. This was a robust increase from the 1.9% gain in September and the largest since December 2023. Compared to October 2023, existing home sales surged higher by 30%.
• CREA was surprised by the results. While the organization expected sales activity to begin to pick up, it did not expect October’s outsized gain. CREA noted that much of the activity came due to a surge in listings in September, which gave purchasers more options.
• The real estate organization also reported that the benchmark home price fell by 0.1% over the month. The run-up in home prices since the pandemic has raised concerns about affordability. In response, the Canadian federal government has made home building a priority.
• The Canada Mortgage and Housing Corporation announced housing starts rose by 7.8% to 240,800 in October.
• CREA believes home sales could stabilize before moving higher in earnest next spring. Purchasers might be sitting on the sidelines waiting for more rate cuts from the BoC.

After soft activity for much of the past year, Canada’s real estate market might be turning the corner. CREA expects an improvement in demand next spring as rates likely go even lower. The real estate market is a critical component of Canada’s economy, and strong demand typically reflects a robust and confident Canadian consumer.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.