Canadian real estate prices slid further, spending almost 5 years to wipe out just 13 months of gains. Canadian Real Estate Association (CREA) data shows home sales fell further in September. Falling demand and lofty inventory left the weakest September demand balance since 1994.
Canadian Home Prices Have Spent Nearly 5 Years Wiping Out 13 Months of Gains
Canadian real estate prices: The price of a typical home across Canada (composite benchmark).
Source: CREA; Better Dwelling.
The price of a typical home dropped for a fourth straight month, falling 0.9% (-$5.7k) to $651,400 in September. That’s 3.4% (-$22.7k) lower than last year, and currently sits at its lowest level since February 2021. It’s a timeline that really highlights how bizarre the initial surge was.
Canadian home prices peaked in March 2022, falling 22.5% (-$189.0k) as of last month. The drop is big, but the 54-month correction only wiped out gains from February 2021 to March 2022. A 13-month rise with the pandemic’s almost zero population growth took almost 5 years to correct. The demand balance also indicates that prices are still a little too steep.
Canadian Real Estate Sales Slip, Inventory Remains Lofty
Canadian home sales through the MLS vs new listings for September.
Source: CREA; Better Dwelling.
A backslide in demand is clearly one of the reasons that prices are pulling back. There were 36,657 existing homes sold through the MLS in September, 7.7% fewer than last year. CREA has only reported weaker September sales 3 times in the past 10 years: 2023, 2022, and 2018. The initial correction explains the weak volumes in 2022 and 2023, while 2018’s slump was during the initial rollout of Ontario’s foreign buyer tax. However, there was a big difference last month—inventory.
Canadian Real Estate Demand Balance At Weakest Level Since 1994
National sales to new listings ratio (SNLR) for September.
Source: CREA; Better Dwelling.
There were a whopping 88,186 new listings that hit the market last month. It was 5.4% lower than last year, but remains the second most new listings in September on record. Last year may have been higher, but weaker home sales eroded the demand balance further. The sales-to-new-listings ratio (SNLR) fell to 41.6%, the weakest September since 1994—32 years ago.
Traditionally, analysts refer to an SNLR between 40% and 60% as a balanced market. However, CREA’s updated guidance considers 45% to 65% balanced at the national level. According to the new guidance, we’re in a buyer’s market where prices are expected to fall further.
Last year, a mild improvement in sales had much of the industry forecasting a recovery this year. RBC even declared the bottom of the market—it was the 8th time in 4 years, but it still resonated with the industry. After the first 9 months of 2026, the industry may be ready to change its tune. This morning, CREA released its latest guidance showing downward revisions to its forecast.
The problem in Canada is that prices of everything rose far faster than incomes. With rates rising, along with unemployment prices need to keep falling. We still are nowhere near affordable.