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The Canadian Real Estate Association (CREA) says last month’s home sales amounted to the first monthly gain since February, but analysts say they don’t expect the market to pick up just yet because conditions have sunk below pandemic highs.

The association revealed Tuesday that sales totalled 35,380 in October, a 1.3% increase from September.

They were also up on a month-over-month basis in 60% of all local markets with Greater Vancouver up 6%, offset in part by a 2.4% drop in Montreal.

However, compared with a year ago, home sales in October were down 36% and analysts maintained it’s a sign the slowdown that materialized earlier this year will stretch on.

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“Tumbleweeds continued to blow across the Canadian housing market in October, with activity very depressed,” said Robert Kavcic, a senior economist with BMO Capital Markets, in a note to investors.

He pointed out last month’s activity remained below the low end of pre-Covid norms and noted it was the quietest October for unit volumes since the economy was climbing out of a recession in 2010.

Rishi Sondhi of TD Economics, similarly said in a note to investors that “sales have already cratered by over 40% since February, are trending at levels last consistently seen in 2012, and appear to have undershot levels in line with fundamentals like income and housing supply.”

Sondhi and Kavcic attributed much of the slowness to interest and mortgage rates, which have been hiked in recent months to combat an inflation level not seen in decades.

That’s weighed on consumer purchasing power and when combined with low levels of new listings, kept many buyers on the sidelines awaiting even further price drops.

Meanwhile, sellers are still refusing to list properties unless they have to move because they have realized prices aren’t as high as they were at the start of the year.

CREA found the number of seasonally-adjusted and newly-listed homes totalled 68,605, up 2.2% on a month-over-month basis in October.

On a non-seasonally-adjusted basis, new listings hit 60,349, down 1.3% from October 2021.

“We have a unique situation where demand has cracked and buyers can’t qualify for, or afford, early-year prices,” said Kavcic.

“But, outside some areas, there’s not a bounty of listings to choose from, and sellers are still able to say ‘no thanks’ and pull listings.”

Despite the lack of listings, the actual national average home price was $644,643 in October, down 9.9% from the same month last year. On a seasonally-adjusted basis, it reached $643,743, down 0.6% from a month earlier.

Kavcic and Sondhi agreed the downward price pressure will continue into next year because mortgage rates are pushing above 5% and more interest rate hikes could be looming.

Sondhi has forecast average home prices retracing about half of the gains made during the pandemic, but cautioned supply levels represent a key risk to TD’s predictions.

“With homeowners feeling the pinch of higher monthly payments due to rising interest rates, some may be forced into listing their properties (although so far, the level of new supply hitting the market each month remains subdued),” Sondhi wrote.

“If a sufficiently large number of these homeowners end up listing their homes, it could downwardly pressure prices by more than we anticipate.”