Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Housing activity eased in September, the first decline since March. The decrease in sales is mainly due to lower sales in Alberta, BC, and Ontario. With sales activity being lower and inventories higher over the past year, house prices remained under pressure, easing by 0.1% m-o-m (-3.5% y-o-y). House prices in Canada have declined 18% since February 2022, with most of the reduction in Southern Ontario.
Housing activity had improved in recent months despite the elevated uncertainty caused by the US tariff threat, the deterioration in the labour market and weak consumer confidence. The lower sales activity in September could be a sign that those headwinds are getting traction in restraining the housing market.
Lower interest rates in recent weeks, with the possibility of further rate cuts before the end of the year, could provide some support for the housing market. However, with uncertainty expected to remain elevated, any improvement in the housing market in the coming months will remain modest. The main risk to the housing market remains a deterioration of the labour market, leading to significant job losses.
In Alberta, housing market activity eased in September, but remained robust by historical standards. However, Alberta was one of the three provinces seeing lower house prices over the past year, mostly due to a decline in Calgary. As such, we note that Edmonton continues to outperform Calgary, both in terms of activity and prices. Strong migration into Alberta, combined with affordability, has been a significant support for housing activity and prices in the province compared to other parts of the country.
Activity in the Canadian housing market declined by 1.7% m-o-m seasonally-adjusted in September. The number of transactions was 39.9k, 0.4% higher than for the same month in the preceding years. The decrease in activity in September was mainly the result of decreased activity in New Brunswick (-6.2% m-o-m), Alberta (-5.4% m-o-m) BC (-3.0% m-o-m), Newfoundland (-2.0% m-o-m), and Nova Scotia (-1.4% m-o-m). On the flip side, activity was higher in Manitoba (+5.6% m-o-m), and Saskatchewan (+1.7% m-o-m).
Compared to the average level of 2019, the number of transactions is about 2.8% lower nationally but continues to be well above its pre-pandemic level in Saskatchewan (+52%), Newfoundland (+46%), and Alberta (+40%). On the other hand, activity is still below pre-pandemic levels in Ontario (-18%), BC (-9%), Nova Scotia (-9%), New Brunswick (-5%).
New listings lowered 0.8% m-o-m seasonally-adjusted in September and were 2.2% higher compared to the prior year. The decrease in new listings was led by Alberta (-2.1% m-o-m), Ontario (-1.6% m-o-m), New Brunswick (-1.2% m-o-m), and Saskatchewan (-1.2% m-o-m). On the flip side, new listings increased in Newfoundland (+10.8% m-o-m), PEI (+3.4% m-o-m), and Manitoba (+2.1% m-o-m).
While sales activity was weaker than new listings in many regions, the month-of-supply measure[1] was unchanged 4.4 months nationally, slightly below its 2019 level. Based on this measure, inventories declined only in Saskatchewan and Manitoba, while they increased the most in BC, Alberta, and New Brunswick.
Inventories are the lowest in Manitoba (2.0 months), Saskatchewan (3.0 months), and Alberta (3.2 months), while they are the highest in BC (6.8 months), PEI (6.7 months), and Newfoundland (4.9 months).
Compared to 2019, inventories in Ontario are 2.0 months higher, 1.3 months higher in BC, and 1.1 months in PEI, while they remain well below in Newfoundland (-10.4 months), Saskatchewan (-7.6 months) and Alberta (-3.7months)
With a month-of-supply at 3.2 months, Alberta’s housing inventory remains well below historical standards.
With inventories rising faster than sales compared to last year, the MLS House Price Index decreased 0.1% m-o-m in September. Compared to the previous year, house prices nationally were lower by 3.5% y-o-y.
Prices decreased in Ontario (-0.4% m-o-m) and were flat in Saskatchewan (0.0% m-o-m). Prices increased the most in Quebec (+1.4% m-o-m), Nova Scotia (+1.1% m-o-m), New Brunswick (+0.5% m-o-m).
On a y-o-y basis, Ontario (-6.8% y-o-y), BC (-2.8% y-o-y), and Alberta (-0.4% y-o-y) were the only provinces where prices declined. Prices increased the most in Newfoundland (+10.3% y-o-y), Quebec (+8.0% y-o-y), Saskatchewan (+7.1% y-o-y), and New Brunswick (+5.8% y-o-y).
Compared to their recent peaks in early 2022, prices have declined by 18.0% nationally. However, prices are still about 26% higher than in January 2020 on the eve of the pandemic. Compared to their recent peak, prices dropped the most in Ontario (-24.6%) and BC (-10.6%). On the flip side, prices have increased significantly in Newfoundland (+24.6%), New Brunswick (+21.1%), Saskatchewan (+14.3%), and Alberta (+12.5%).
In Alberta, benchmark prices were flat 0.0% m-o-m and eased 0.4% compared to last year. However, this masked a divergence between its main metropolitan area. Prices in Calgary declined 0.1% m-o-m and 2.5% y-o-y, while prices in Edmonton continued to increase (+0.1% m-o-m, +4.5% y-o-y). Edmonton has been outperforming relative to Calgary for some months. Strong population growth and better affordability could explain the better performance in Edmonton.
In Alberta, sales activity declined 9.5% y-o-y in September, but the housing market remains robust with transactions still well above their pre-pandemic level (+40%). (see table below for details).
On a 3-month moving average of the year-on-year, transactions decreased 6.5% in the province, with declines in Calgary (-11.5%), Edmonton (-4.8%), Lethbridge (-4.5%), and Central Alberta (-2.2%). On the flip side, activity was higher in Lloydminster (+7.5%), Medicine Hat (+4.9%), and Grande Prairie (+3.7%).
Compared to the average level of transactions in 2019, activity in the province increased by 40%, led by Lloydminster (+56%), South Central Alberta (+55%), Edmonton (+55%), and Central Alberta (+50%).
New listings were higher than last year at the provincial level (+10.0%). However, there are some significant differences regionally. On a 3-month moving average of the year-on-year, new listings increased the most in Medicine Hat (+13.6%), Edmonton (+13.2%), South Central Alberta (+10.9%), and Central Alberta (+10.4%). New listings were lower over the same period in Fort McMurray (-7.7%).
With sales below new listings in June, some regions saw an easing in market conditions. The primary seller’s markets are Lloydminster, Lethbridge, Medicine Hat, South Central Alberta, and Grande Prairie. The main buyer’s market are Calgary, Edmonton, and Fort McMurray.
Average house prices in the province increased by 2.0% on a 3-month moving average of the year-on-year. Prices are higher in most regions led by South Central Alberta (+16.7%), Lethbridge (+11.6%), Grande Prairie (+9.9%), and Alberta West (+8.2%). Prices decreased only in Calgary (-0.1%).
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Independent Opinion
The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any organization or person in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication.