. The steep and rapid rise in mortgage borrowing costs has reversed the high-sales trends, perhaps returning the housing sales activity to the pre-pandemic levels.However, a longer-term view of the data suggests October sales activity was below pre-pandemic levels. Indeed, last month’s sales were 15 per cent lower than the pre-pandemic, 10-year average for October, suggesting that escalating mortgage costs have done more harm than just reversing the pandemic-driven hype in housing sales.
Nevertheless, the October sales and listing activity suggest the beginning of a market recovery. Sales were up and new listings in October rose 2.2 per cent from the month before. The increase in sales and new listings may be feeble, but these signs are positive and, in the absence of other unexpected shocks, could lay the foundation for a more robust recovery once buyers and sellers sitting on the sidelines decide to become active again.
If the housing bust were to imply a decline in housing prices to such levels that would wipe out the gains over successive years, such a decline in prices has not yet materialized in Canada. In all major housing markets, the HPI benchmark prices were higher in October than three or five years ago.