Lower interest rates fuel increase in transactions as buyers return to the housing market
Canada’s housing market saw an unexpected surge in activity last month, with home sales climbing to their highest level in over two years.
A 7.7% increase in transactions from September brought October sales to levels not seen since April 2022, according to the Canadian Real Estate Association (CREA). The rebound follows the Bank of Canada’s recent interest rate cuts, which have begun to reignite buyer confidence.
The Bank of Canada implemented its largest rate cut since March 2020 in October, accelerating efforts to boost the economy. Lower borrowing costs have provided prospective homebuyers with more purchasing power, a trend policymakers predicted would first impact the housing sector.
“The jump in home sales last month was definitely an October surprise,” CREA senior economist Shaun Cathcart said in the report. “There probably won’t be another rush of new supply like that until next spring, and at that point, mortgage rates should be close to their expected lows, as well.
“You can think of the October numbers as a sort of preview for what we might expect to see next year.”
The central bank has also hinted at further rate cuts in the coming months, raising expectations of continued housing market growth.
While sales surged, home prices remained stable. The benchmark price for a Canadian home dipped 0.1% in October to $716,800, a sign that increased activity has not yet driven significant upward pressure on prices. This stability may further encourage hesitant buyers to enter the market.
“October’s strong sales numbers across Canada suggest buyers have been in the market since rates began to fall in early summer, but they were waiting for the right property to come up for sale, which didn’t happen in a big way until September,” said CREA chair James Mabey.
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