This despite borrowing costs resting at their highest level in more than two decades
Canadian home prices saw their largest drop in more than a year despite persistent high borrowing costs impacting potential buyers.
The Canadian Real Estate Association released data showing the benchmark price of homes in Canada fell by 1.1% in November from the previous month. This marked the biggest decline seen since September 2022 and was the third consecutive decrease as the benchmark price now stands at $735,000.
Home sales dropped by 0.9% in November month-over-month as mortgage rates remain at high levels. New listings also fell by 1.8%, while the sales-to-new listings ratio stood at 49.8%. With the same statistic standing at 49.4% in October, the increase in November was the first time the measure has climbed since April. However, the ratio still suggests that the market is looser than normal as its long-term average is 55.1%.
Shaun Cathcart, CREA’s senior economist, said that there were more sellers putting homes on the market earlier this year, but the trend has slowed down.
“Not getting offers they were willing to accept, it’s looking like many of them are also now resigned to hunker down until next year,” said Cathcart, as quoted by Bloomberg.
“It’s probably a good move given that recent expectations around interest rate cuts suggest it might be a somewhat more active spring market than we thought,” he added.
Borrowing costs are at the highest levels seen in more than two decades, which has turned away prospective buyers and put more pressure on owners struggling with higher mortgage payments.
The Bank of Canada last week left its benchmark rate unchanged for the third consecutive meeting but stated that it will be raising rates if it needs to. Data compiled by Bloomberg said that economists and traders expect the central bank to begin lowering interest rates at some point in the second quarter of 2024.
