Canadian real GDP rose 0.1 per cent from the prior month in September, following contractions in the prior three months. Manufacturing jumped 0.9 per cent in September as inventory formation pushed economic activity upwards. Construction activity rose by 1 per cent, with residential building up 3.9 per cent, the largest gain since April 2021. Offices of real estate agents and brokers fell for the third consecutive month, dropping 4.1 per cent as sales weakened into the fall. Preliminary estimates suggest that output in the Canadian economy rose 0.2 per cent in October.

GDP declined 0.3 per cent in the third quarter, erasing a 0.3 per cent gain in the second quarter. The slowdown was driven in part by weaker exports, which declined 1.3 per cent from the prior quarter, led by weaker petroleum exports. Housing investment rose 2 per cent from the prior quarter but an increase in new construction (+6.4 per cent) was offset by a contraction in ownership transfer costs representing resale activity (-4.3 per cent). Employee compensation rose 1.3 per cent and household disposable income rose 1 per cent, driving the household saving rate to 5.1 per cent in the third quarter.

Canadian GDP bucked expectations and contracted in the third quarter, declining by 1.1 per cent on an annualized basis. At the same time, Statistics Canada revised its second-quarter GDP figure considerably upward, meaning that the economy has again avoided entering a technical recession. With October's preliminary figure again positive, the Canadian economy appears weak but is so far not shrinking substantially in aggregate terms. However, with very soft GDP figures occurring amid a rising unemployment rate and some progress on inflation, markets continue to expect that the Bank of Canada is likely at the end of its tightening cycle. The next rate announcement is on next Wednesday, December 6th.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian housing starts rose 1 per cent to 274,681 units in October at a seasonally adjusted annual rate (SAAR). Starts were up 4 per cent from the same month last year. Single-detached housing starts rose 5 per cent from last month to 59,911 units, while multi-family and others rose 1 per cent to 214,768 units (SAAR). 

In British Columbia, starts jumped 50 per cent from last month to 60,174 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts were unchanged from last month at 5,588 units while multi-family starts surged 65 per cent to 51,813 units. Starts in the province were 33 per cent above the levels from October 2022. Starts increased from last month by 9k units in Vancouver, 6.2k in Victoria, 2.9k in Kelowna, and 2.2k in Abbotsford. The 6-month moving average trend in BC fell by 0.3 per cent to 50,887 SAAR.

Copyright British Columbia Real Estate Association. Reprinted with permission.

The British Columbia Real Estate Association (BCREA) reports that a total of 5,373 residential unit sales were recorded in Multiple Listing Service^® (MLS^®) systems in October 2023, an increase of 1.8 per cent from October 2022. The average MLS^® residential price in BC was $968,786 up 4.1 per cent compared to October 2022. The total sales dollar volume was $5.2 billion, representing a 6 per cent increase from the same time last year.

“Home sales have slowed as expected given high borrowing costs and a punishing stress test,” said BCREA Chief Economist Brendon Ogmundson. “However, the inventory of homes for sale remains quite low, despite a modest uptick in new listings. Consequently, markets have found balance, though at a very low level of activity.”
 
On a seasonally adjusted basis, active listings in the province have increased for the fifth consecutive month, but still remain low by historical standards and fall short of what is typically required for a sustainable market balance in the long term.
 
Year-to-date BC residential sales dollar volume was down 13.6 per cent to $63.1 billion, compared with the same period in 2022. Residential unit sales were down 105 per cent to 64,936 units, while the average MLS^® residential price was down 3.4 per cent to $971,802.

Copyright British Columbia Real Estate Association. Reprinted with permission.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $1,196,500. This represents a 0.6% decrease from September 2023 and a 4.4% increase from October 2022.

Specifically:

- The benchmark price for detached homes decreased 0.8% from Sep 2023 and increased 5.8% from Oct 2022.

- The benchmark price for townhouses increased 0.2% from Sep 2023 and increased 6% from Oct 2022.

- The benchmark price for apartment/condos increased 0.2% Sep 2023 and increased 6.4% from Oct 2022.

*Areas covered by the Real Estate Board of Greater Vancouver include: Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.

In August, for the second consecutive month, Canadian real GDP was largely unchanged. A surge in sales of machinery, equipment, and supplies led to a 2.3 per cent increase in the Wholesale trade sector. Meanwhile, oil & gas extraction rose 1 per cent on higher extractions in Western Canada while mining and quarrying rose 4.2 per cent. Manufacturing, on the other hand, fell 0.6 per cent, declining for the third consecutive month. Offices of real estate agents and brokers fell for the second consecutive month, dropping 3.8 per cent as sales softened over the late summer. Overall, Canadian real GDP is now 3.6 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy was again largely unchanged in the Canadian economy in September. 

With a flat August GDP number and September's preliminary estimate also flat, the Canadian economy is expected to have been largely unchanged since February, despite rapid population growth. Indeed, with the preliminary estimate for September, annualized third-quarter GDP is expected to contract 0.1 per cent, following a 0.2 per cent contraction in the second quarter. This would technically imply that the Canadian economy is in a shallow recession. Despite still too-hot inflation numbers, the Bank of Canada held its overnight rate steady at 5 per cent last week, giving the prior 10 rate hikes time to work through the economy. Given signs of weak growth and cooling labour markets, financial markets no longer anticipate additional rate hikes this cycle.

Copyright British Columbia Real Estate Association. Reprinted with permission.