Canada Home Sales Dip 11 Percent Annually in 2023

Based on new data from the Canadian Real Estate Association, home sales activity rose 8.7% between November and December 2023, putting it on par with some of last year's relatively stronger months recorded over the spring and summer.

The actual (not seasonally adjusted) number of transactions came in 3.7% above December 2022, the largest year-over-year gain since August.

On an annual basis, home sales totaled 443,511 units in 2023, a decline of 11.1% from 2022.

It was technically the lowest annual level for national sales activity since 2008; although it was very close to levels recorded in each of the five years following the 2008 financial crisis, as well as the first year the uninsured stress test was implemented in 2018.

"While December did offer up a bit of a surprise in sales numbers to cap the year, the real test of the markets' resilience will be in the spring," said Larry Cerqua, Chair of CREA.

"Was the December bounce in home sales the start of the expected recovery in Canadian housing markets? Probably not just yet," said Shaun Cathcart, CREA's Senior Economist. "It was more likely just some of the sellers and buyers that were holding onto unrealistic pricing expectations last fall finally coming together to get deals done before the end of the year. We're still forecasting a recovery in housing demand in 2024, but we'll have to wait a few more months to get a sense of what that ultimately looks like.

The number of newly listed homes dropped by 5.1% on a month-over-month basis in December, bringing them to the lowest level since June.

With sales up and new listings down in December, the national sales-to-new listings ratio tightened to 57.8% compared to just 50.5% in November. The long-term average for the national sales-to-new listings ratio is 55%.

There were 3.8 months of inventory on a national basis at the end of December 2023, down notably from 4.2 months at the end of November. The long-term average is five months of inventory.

The Aggregate Composite MLS Home Price Index (HPI) declined by 0.8% on a month-over-month basis in December 2023. In line with firming market conditions, this measure was smaller than the 1% decrease recorded in November and the 0.9% decline logged in October.

Price declines of late have been predominantly located in Ontario markets, particularly the Greater Golden Horseshoe, and to a lesser extent British Columbia. Elsewhere in Canada prices are mostly holding firm or in some cases (Alberta, New Brunswick, and Newfoundland and Labrador) continuing to climb. That said, as market conditions have recently been evolving, price trends are becoming more of a mixed bag where the regional differences are less clearly defined.

The Aggregate Composite MLS HPI was up 0.7% on a year-over-year basis in December 2023, up slightly from the 0.6% year-over-year gain in November.

The actual (not seasonally adjusted) national average home price was $657,145 in December 2023, up 5.1% from December 2022.