Canada’s home sales rose in November as buyers took advantage of cheaper interest rates
Canada’s housing market gained momentum in November, with sales and prices rising as prospective homebuyers took advantage of the cheaper mortgage rates.
The volume of home sales reached 44,590 last month, a 2.8-per-cent rise over October after removing seasonal influences. It was the fourth straight month of increasing transactions, according to the Canadian Real Estate Association.
At the same time, the home price index, which removes the most expensive transactions, was $723,100 in November. That was 0.6 per cent above the previous month and the largest monthly price increase since July. CREA called it a “significant” price increase.
Last month’s activity was the highest for November since the pandemic’s near-zero interest rates fuelled a buying frenzy throughout the year. Historically, winter is a slow selling season.
“Normally we might expect this market rebound to take a pause before resuming in the spring,” the association’s senior economist Shaun Cathcart said in a press release.
Since the Bank of Canada started cutting its benchmark interest rate in June, mortgages have become cheaper. The common five-year fixed mortgage is now closer to 4 per cent compared to above 5 per cent in January.
With the central bank’s second supersized interest rate cut in December along with easier mortgage policies, the industry expects the momentum to continue. Last month, sales were higher in the Toronto region, the country’s largest real estate market, as well as in the major cities of Vancouver, Calgary and Montreal.
The home price index also increased in those areas. Nationally, the index is only down by 1.1 per cent year over year. And although the typical home price is lower than the peak of about $830,000 reached in March, 2022, prices are still 34 per cent higher than prior to the start of the pandemic.
This week, looser mortgage policies took effect. The new rules allow all buyers to make a smaller down payment on homes that cost up to $1.5-million. Previously, buyers were required to make a down payment of at least 20 per cent if the purchase price topped $1-million.
The new rules also allow first-time homebuyers to stretch out their loan payments over 30 years if they have to take out an insured mortgage. Previously, the longest amortization for an insured mortgage was 25 years.
The market has become more competitive with fewer homeowners listing their properties for sale. New listings fell 0.5 per cent from October to November on a seasonally adjusted basis. That followed a 3 per cent drop in listings in the September to October period.
This article was first reported by Reuters
