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Canada Housing October 2023

Canada: House prices fall in October; housing starts stay solid

According to the Teranet-National Bank House Price Index, house prices dropped 1.0% in October (September: -1.3%), the second straight monthly decline and likely reflecting in part the effect of higher interest rates. On an annual basis, house prices increased 2.8% in October, which was below September’s 3.0% expansion.

Meanwhile, housing starts increased 1% in October from September and were well above the Q3 average, boding well for residential investment in the quarter.

Our Consensus is for housing starts to average slightly lower in 2024 compared to 2023, but to remain elevated compared to the levels that prevailed in the 2010s.

On the reading and outlook, TD Economics’ Rishi Sondhi said:

“Starts continue to run at a solid pace, lifted by lofty home prices, low levels of unsold inventories and a surge in rental construction. And, they are likely to remain elevated in the near-term, consistent with robust permit issuance. For residential investment and GDP growth, October’s modest gain will provide some offset to the decline in home sales reported yesterday. In our view, past declines in home sales should lead starts lower through 2024. That said, government policy changes meant to spur homebuilding (and help address affordability) should keep starts at lofty levels.”

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