Canadian Housing Market and Economic Overview (September 2024)

Housing Market Snapshot:

• Interest Rates: Following the Bank of Canada’s third interest rate cut of the year, national home sales in Canada rose by 1.9% month-over-month in September, the highest level since July 2023.
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• Key Markets: Significant increases observed in Greater Toronto Area, Hamilton-Burlington, Montreal, Quebec City, Greater Vancouver, and Victoria.
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• Sales vs. Listings: New listings climbed 4.9% month-over-month, leading to a sales-to-new listings ratio of 51.3% (down from 52.8% in August).
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• Inventory Levels: As of September 2024, there were 4.1 months of inventory, slightly below the long-term average of 5.1 months.

Home Prices:

• The National Composite MLS® Home Price Index increased marginally by 0.1% from August; however, it is 3.3% lower than September 2023, indicating overall price stability since the beginning of the year.

Inflation Insights:

• The September Consumer Price Index (CPI) rose by 1.6% year-over-year, the slowest rate since February 2021, largely attributed to lower gasoline prices.
• Core inflation remains unchanged, with inflation excluding gasoline at 2.2%. Price levels for essentials like rent (+21.0%) and food (+20.7%) remain elevated compared to 2021.
• Inflation data supports expectations for a potential 50 basis point rate cut at the upcoming October 23 meeting.

Employment Trends:

• September added 46,700 jobs, marking the first decline in the unemployment rate this year to 6.5%.
• Private sector employment continues to grow, rising by 61,000 jobs (+0.5%) in September, while public sector jobs fell slightly.
• Average hourly wages have increased by 4.6%, but this marks a decrease from the previous month’s rate of 5.0%.

Conclusion:

• While homebuyers are cautious, waiting for potential further rate cuts, the housing market is set to gradually increase in activity. The economy's slowdown impacts monetary policy as the Bank of Canada considers more aggressive rate reductions to stimulate growth.
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• Overall, economic trends indicate expected stronger home sales in the upcoming spring market, alongside easing inflation pressures and improved employment figures.