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Oct 18, 2023

CREA lowers resale housing market forecast

As a result of weaker home sales and pricing trends since the summer, combined with softer market conditions going forward and ‘higher for longer’ interest rates, the forecast for home sales and average home prices over the balance of 2023 and into 2024 has been lowered, says the Canadian Real Estate Association (CREA). 


National home sales activity settled back down in recent months following a brief rally this spring. While the Bank of Canada's rate hikes in June and July obviously played a factor, it has been also been the messaging around how much longer rates would remain high compared to expectations back in the spring. The summer rate hikes also rekindled uncertainty that more were still to come. 


In a typical year, housing markets tend to be most active in the spring. It tends to wind down over the summer, but there's often a bit of an uptick in the fall. That has certainly been true on the new listings side since Labour Day; however, this influx of new supply has not led to an uptick in sales. 


As a result, the national sales-to-new listings ratio has fallen from near 70 percent to 50 percent in the span of just five months, while the rally in prices has slowed markedly, or in the case of Ontario, reversed. 


Almost 450,000 residential properties are forecast to trade hands in 2023, a 9.8 percent decline from 2022. Unlike the previous downgrade in July, which was broad-based, the October downward revision to sales was predominantly due to fewer expected sales in Ontario and British Columbia. These more than offset an upward revision to the forecast for activity in Alberta. 


National home sales are forecast to rebound by nine percent to 490,257 units in 2024 as interest rates get closer to, and eventually start, trending down and housing markets make a turn back towards their long-term trends. This forecast would place activity close to the pre-pandemic 10-year average. 

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