October 20, 2021

When Frank Sinatra sang “it’s a long, long time from May to September” in the mournful September Song, he wasn’t talking about the Canadian housing market. But he could have been.

The latest data for September 2021, shows that the spiky volatility seen in the early Spring market, has started to subside and it is showing signs of stabilizing.

The numbers tell a consistent – and increasingly familiar – story: Canada’s supply of residential homes remains well-below demand. That chronic supply shortage is reflected in the stark fact that the national housing inventory, according to the Canadian Real Estate Association (CREA), is standing at 2.1 months, compared with the historic long-term average of about five months of inventory.

This means that prices and the volume of sales are settling at current levels. It may be a respite from the unsettling volatility in national housing markets over the course of the pandemic – most notably in the first half of this year. But it also means that for many Canadian families, buying a home is an increasingly an elusive aspiration, despite relatively low interest rates, improved levels of household savings, and abundant employment opportunity. (According to Statistics Canada, employment grew by 157,000 jobs in September 2021, returning to pre-pandemic levels last seen in February 2020.)

According to CREA, national home sales rose by 0.9 percent in September over August in the face of a 1.6 percent drop in the month-over-month number of newly listed properties. Of note, actual activity in September was down 17.5 percent from year-earlier levels, although it was the second-highest September sales figure on record. That reflects the anomalous pace of sales in September 2020.

The exceptional circumstances of the September 2020 market are also reflected in the MLS Home Price Index, which rose 1.7 percent month-over-month and 21.5 percent year-over-year.

The accessibility of home ownership was a hot topic on the federal election campaign trail in the first weeks of September. It remains to be seen if and/or how such complex issues as down payment requirements and the forced savings required by 30-year mortgage amortization are addressed in future policies.

In September, the U.S. residential resale market continued to show signs of robust activity according to seasonally-adjusted data from the Commerce Department.

On a seasonally-adjusted basis, some 800,000 sales were posted in the month. That represents an increase of 14 per cent from 702,000 homes sold in the month earlier. However, year-over-year sales were almost 18 per cent below the 971,000 houses sold in September 2020.

According to data from the National Association of Realtors (NAR), the number of days on the market was 17 in September. That is no change from August, but down from an average of 21 days in September 2020.

Inventory levels remain tight, indicating an ongoing shortage of supply. NAR reports a 2.4 months’ supply in September  2021 per cent versus 2.7 per cent a year earlier. Historically, a housing supply of six to seven months has been viewed as “healthy.”