Canadian home sales fell in October by 5.6% (sa m/m). Listings followed suit, falling by 2.3%. The larger sales decline relative to listings further eased the sales-to-new listings ratio, an indicator of how tight the market is, to a 10-year low. The ratio now sits at 49.5% which is substantially below its recent April peak of 68.3% (not to mention its January 2022 peak of over 80%) and a notch below its long-term average of 55.2%. This has tipped the national market into buyers’ territory, at least relative to historical deviations. There were 4.1 months of inventory—up from this year’s low of 3.1 in May, but still below its long-term average of around five months.

Two-thirds of the local markets we track experienced sales and listings declines in October. Sales fell in 20 of the 31 markets we track, with declines of 10% or more in Vancouver, Montreal, Ottawa, Victoria, Fraser Valley, Barrie, Saint John and Charlottetown, topped with an almost 30% decline in Peterborough. On the other hand, declines north of 10% in listings were limited to 4 markets: Okanagan-Mainline, Kitchener-Waterloo, Peterborough, and Lethbridge, the latter experiencing the largest drop of around 14%. Despite October’s decline in listings, the previous increases between May and September, with an average monthly increase of around 5%, has brought listings to levels consistent with observed long-term averages. October’s level of listings was parallel to the 2010–19 average level observed for this month, while October’s level of sales sat 12% below the 2010–19 average level for the month.

Prices, as measured by the MLS Home Price Index (HPI), edged down by 0.8% (sa m/m) in October—the second monthly decline in a row. There were regional differences however, whereby prices increased in almost half of the local markets we track, which were offset by declines elsewhere. Despite these declines, prices remain well above their pre-pandemic levels across the board, with some markets, namely Calgary, Greater Moncton, Quebec City and Saskatoon, continuing to be above February 2022 levels, the month before the Bank of Canada started hiking, marking the start of a year-long correction in the housing market. At the national level, prices are now only 11% below the February 2022 peak, and around 38% above pre-pandemic levels. September’s monthly decline was led by single-family homes (-1.0%) followed by townhomes (-0.5%), while apartments were relatively unchanged (0.1%).


National home sales continued their downward trend in November, recording their third monthly decline in a row and pulling prices down with them for a second month. The story remains one of increased borrowing costs along with heightened uncertainty about future outcomes of inflation, interest rates, and the economy. This has been particularly exacerbated recently in light of sovereign yield volatility and geopolitical tensions which further muddy the outlook. This has pushed many buyers to the sidelines as they await more clarity.

Since the Government of Canada bond yields act as benchmarks for fixed rate mortgages with corresponding terms, movements in yields whether up or down directly impact the cost of mortgage borrowing. Chart 1 shows that fixed rate mortgages with terms between 3 and 5 years now account for the highest share of new mortgages, and those with terms between 1 and 3 years the second highest. This makes sense, a compromise between the previously most popular option, the 5-year term fixed rate mortgage, which would be locking in today’s high rates for 5 years without capturing expected incoming rate cuts, and the variable rate and less than 1-year fixed rate mortgages, which would not provide ease of mind in today’s highly volatile uncertain environment. Despite coming off recent peaks, yields on the Government of Canada bonds with maturity between 3 and 5 years were on average around 10–14 bps higher in October than in September. This translated into a 10–20 bps increase in the posted rate for conventional 3-year and 5-year mortgages, not to mention a 16 bps increase in the posted rate for 1-year mortgages (chart 2). While these increases are likely not large enough to make or break a purchase decision, they point to the uncertainty faced by buyers who may worry that rates still have some way to go before stabilizing and eventually normalizing back down. 

Chart 1: Mortgage Originations; Chart 2: Mortgage Rates

Another thing to remember is that the housing market tends to exacerbate moves in each direction whenever the market turns a corner. A perceived trend of slowing demand and declining prices would only encourage more of both as buyers may hold off for prices to decline further and therefore add to the slowdown in demand at the same time that sellers might rush back into the market to secure sale prices before further declines. The opposite is true—a perceived trend of an uptick in demand and increasing prices might encourage buyers to rush back into the market before prices go up further and in turn add to demand and price pressures.

These are just a couple of many factors impacting housing market outcomes to watch over the next few months as heightened uncertainty persists. It is worth closing with a bit of a zoomed-out perspective on where prices are today. In previous reports, we discussed the nature of price adjustments and monthly price volatility. Prices can go up and down in any particular month, driven by many factors, and focusing on short-term price movements may distract from the larger picture, which is that prices remain quite elevated relative to 3 years ago despite all the patches of declines we’ve seen since then. Also, it is typically the case that price movements within these elevated (and, unaffordable) ranges tend to be more noticeable in regions where the increases since pre-pandemic were most pronounced (and, unsustainable).

Chart 3 plots, for each market, the change in prices since August against August’s prices relative to pre-pandemic levels. With the exception of Moncton, we can see that prices in September and October declined in markets where August’s prices remained 40% or more above pre-pandemic levels despite last year’s correction. We also see that these 2 months’ price declines have so far been mainly concentrated in Ontario markets, with BC markets slowly joining the pack— 2 provinces that saw the most price appreciation since the pandemic started. 

Chart 3: Prices Go Up and Down, But Remain Well Above Pre-Pandemic Levels
Table 1: Sales, New Listings, Average Price, MLS HPI, Sales-to-new Listings Ratio, Months Inventory; Chart 1: Home Sales for Select Cities
Scotiabank Housing Market Watch—October 2023
MLS Home Price Indices — Western Canada
MLS Home Price Indices (cont.) — Eastern Canada
MLS Home Price Indices (cont.) — Eastern Canada and Canadian Aggregate