
Written by Breck Hapner
Editor’s note: Welcome to the Haven State of the Canadian Housing Market series. Every month, we will share an update explaining details and projections related to Canada’s real estate sector to keep you informed.
The Canadian Real Estate Association (CREA) has lowered its forecast with respect to the Canadian housing market for the remainder of this year. After comparing present trends with April 2023 statistics, it became apparent that a two-percent reduction in home values wasn’t actually what was going to happen.
In an article from October 13th, 2023, CREA adjusted their forecast to reflect the reality of Canadian home sales data supplied by their September update, which shows negative momentum in the Canadian real estate market during the remaining three months of 2023.
This comes as no surprise, as the September listing numbers were much higher than anticipated. The sales-to-new-listing ratio dropped from 70 to 50 percent, indicating a notable shift. Over the past five months, there have been more listings relative to sales. Coupled with the effects of considerably higher mortgage rates, the market is experiencing severe repercussions.
So, what do the new numbers look like? According to an October 13th Bloomberg report, CREA is now expecting a 9.8 percent decrease in sales compared to 2022. CREA is referencing sales, not prices, which is an important distinction. The predicted change in prices is a negative 3.3 percent compared to last year.
Why the discrepancy? Because of the supply numbers. There is not enough supply to handle the number of Canadians seeking homes, as well as those immigrating to Canada, which is affecting housing market dynamics.
The new CREA projected home price is $680,686. Previous CREA forecasts anticipated a 6.8 percent decline in sales and a two-percent decrease in prices. However, because of so many unanticipated new listings in a market already experiencing reduced activity, the projection had to be revised.
CREA Market Forecast Data
The revised market forecast charts by CREA highlight the significant expected decrease in activity compared to 2021 and 2022. However, CREA is now forecasting that 2024 numbers will be higher than 2023, largely predicated on the expectation that interest rates are going to remain about the same or begin to drop heading into 2024. If interest rates continue to rise, the CREA Residential Market Forecast numbers could change significantly.
As shown by the average price forecast chart, Canadian prices are projected to come down 3.3 percent, with the majority of the price declines in the following regions: British Columbia at -2.4 percent, Saskatchewan at -1.4 percent, Manitoba at -2.8 percent, and notably Ontario at -6.2 percent.
Prices are still expected to rise in provinces such as Alberta, New Brunswick, Nova Scotia, and Newfoundland. However, in 2024, CREA is forecasting 1.5-to-two-percent price increases across Canada, specifically Alberta at 4.8 percent. While these might seem like low numbers, they represent a significant contrast to the figures from the previous year and what is anticipated for 2024.

Canadian Market Fluctuations Creating Uncertainty
An October 13th report by Scotiabank revealed that Canadian home sales fell 1.9 percent from August to September, accompanied by a 6.3 percent increase in home listings. Aligning with CREA, Scotiabank said, “This significant increase in listings in the face of slowing sales activity further eased the sales-to-new listings ratio, an indicator of how tight the market is.”
Will the housing market loosen up? For the past three months in a row, Canadian home sales have declined, and the housing market has softened. The question remains: will the CREA forecast prove accurate, and what will be the final state of the market as it approaches the quietest months of the year, October through December?
As the CREA forecast states, new listings have posted a cumulative gain of about 35 percent since March. This indicates that the conflict between demand and supply led to a stronger-than-expected but short-lived rally in pricing, which topped out quickly. CREA reports that the MLS Home Price Index (HPI) decreased 0.3 percent from August to September, the first decline since March.
According to an October 13th Yahoo! Finance article, September’s small dip in prices at the national level was entirely due to pricing slowdowns in Ontario. Prices are still rising slowly in all other provinces and, according to CREA, “Incoming data over the next few months will determine whether Ontario is an outlier or just the first province out of the gate to show the kind of softening price trends that would be expected to play out in at least some other parts of the country, given where interest rates are.”
CREA Reports Aggregate Composite Benchmark Price Up 1.1 Percent
According to CREA, the aggregate MLS HPI was up 1.1 percent on a year-over-year (YOY) basis, the largest gain since September 2022. CREA says this is a base effect resulting from the rapid decline in prices in 2022, as the comparison is not indicative of the current rise in prices.
What Can Canadians Expect Over the Short-Term?
As a result of the weaker sales and pricing trends observed since this summer, along with the anticipated prolonged impact of higher interest rates, as indicated by the Bank of Canada, the forecast for sales and average prices for the remainder of this year and the next has been lowered.
CREA says the housing market should expect a 10-percent decline in sales this year, followed by a nine-percent rebound in 2024. Although these numbers indicate a slower-than-normal market next year, CREA still projects real estate to be in a rebounding position.
What Factors Have Contributed to the Current Situation?
The recent market weakness can be traced to the Bank of Canada’s rate hikes in June and July, which kept homeowners and potential buyers on the sidelines due to affordability concerns. Also, the aforementioned surge of new supply has led to a three-percent decline in the national average sale price.
According to CREA, 2024’s anticipated 1.5-percent price rebound will keep the average annual price steady in the $600,000 to $700,000 range. Housing demand emerging from the resale sector and the rental markets, which are currently undersupplied, will offset the high rates.

What Does the Future Hold for the Market?
The major risk to the updated CREA forecast is contingent upon the future decisions of the Bank of Canada. The current underlying assumption is that there will be no further interest rate hikes, or at most, one more, with indications from the Bank of Canada suggesting that the next move for rates is likely to be a decrease. How this plays out will determine what type of spring housing market Canada will experience in 2024.