Home sales across Canada declined 4% in August from July as higher interest rates keep potential buyers on the sidelines and lead to a slowdown in the market, according to the
Canadian Real Estate Association (CREA).
The latest data from CREA showed that seasonally adjusted home sales across Canada totalled 38,345 in August, down 4.1% from July of this year.
The seasonally adjusted number of home sales fell for a fifth consecutive month in August. However, home sales in August rose 5.3% from a year earlier.
The Bank of Canada raised interest rates in July of this year, pushing the average interest rate charged on a home mortgage above 7%, the highest level in more than two decades.
Consequently, many potential homebuyers are staying on the sidelines while they wait for interest rates to come down. At 7% many homebuyers would not qualify for a mortgage from one of Canada’s traditional banks.
While home sales have remained strong in Canada’s two largest markets, Toronto and Vancouver, they have declined in smaller cities such as Montreal and Ottawa, said CREA.
The seasonally adjusted average price of a home in Canada declined 2.3% in August from July to $674,184.
While home prices have continued to grow in Quebec and Atlantic Canada, they have slowed in central Canada and parts of the prairie provinces.
CREA said it doesn’t expect Canada’s housing market to fully recover until the Bank of Canada ends its current monetary policy tightening regime.
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