Sales-to-New-Listings Ratio (SNLR)

Buyer’s vs. Seller’s Market

Canada’s Historical Sales-to-New-Listings Ratio (SNLR) Chart

Source: Canadian Real Estate Association

The Sales-to-New-Listings Ratio (SNLR) is a housing market indicator that compares the number of homes sold during a period with the number of homes newly listed for sale during the same period. It is commonly used to assess the balance of bargaining power between home buyers and sellers.

A higher SNLR means that home sales are high relative to the number of properties entering the market. This generally gives sellers more bargaining power, as buyers have fewer new listings to choose from relative to the number of homes being purchased. A lower SNLR means that sales are low relative to new listings, generally giving buyers more choice and negotiating power.

As a general rule of thumb, an SNLR below 40% is considered a buyer’s market, an SNLR between 40% and 60% is considered a balanced market, and an SNLR above 60% is considered a seller’s market. These thresholds are approximate, and the range associated with balanced conditions can vary between housing markets and methodologies.

In this context, a “balanced market” does not necessarily mean that housing is affordable, that there is no housing shortage, or that home prices reflect the cost of supplying new housing in an unrestricted market. It simply means that current market conditions do not strongly favour either buyers or sellers. Longer-term factors, including population growth, land availability, construction costs, zoning restrictions, infrastructure constraints, and the cost and time required to obtain development approvals, can affect housing supply and prices independently of the current SNLR.

SNLR can therefore be useful for understanding short-term housing market conditions, but it should be considered alongside measures such as active listings, months of inventory, days on market, home price changes, and the sale-to-list-price ratio.

Note: SNLR thresholds are rules of thumb rather than fixed boundaries, and different organizations use somewhat different ranges. CREA currently considers a national SNLR of roughly 45% to 65% consistent with balanced market conditions. CMHC used below 40% to indicate a buyer’s market and above 55% to indicate a seller’s market, with the range in between considered balanced.

SNLR is calculated by dividing the number of homes sold in a specific period by the number of new listings added to the market during that same time frame. The result is then multiplied by 100 to get the percentage.

For example, if there were 2,000 homes sold and 3,000 new listings added in a month, the SNLR would be 67% ((2,000/3,000) x 100).

SNLR Formula

A buyer’s market occurs when the supply of homes available for sale is relatively high compared with buyer demand. Using the SNLR, a ratio below 40% is commonly considered to indicate buyer-favouring market conditions.

A low SNLR means that relatively few homes are being sold compared with the number of new properties entering the market. If these conditions persist, listings can accumulate, homes may take longer to sell, and sellers may face greater competition from other properties.

This generally gives buyers more bargaining power. Buyers may have more homes to choose from, more time to make decisions, and greater ability to negotiate on price, closing dates, conditions, or other terms of the sale. Sellers, meanwhile, may need to reduce their asking price or make other concessions to attract buyers.

A buyer’s market does not necessarily mean that home prices will fall. CMHC notes that, historically, a national SNLR below 40% has been associated with home prices rising more slowly than overall inflation. Prices can therefore continue increasing even when market conditions favour buyers.

Other indicators, such as months of inventory, days on market, the sale-to-list-price ratio, and recent price trends, can provide additional information about how much negotiating power buyers actually have.

A seller’s market occurs when buyer demand is strong relative to the supply of homes available for sale. Using the SNLR, a ratio above 60% is commonly considered to indicate seller-favouring conditions.

A high SNLR means that a large number of homes are being sold relative to the number of new listings entering the market. If this continues, available inventory can become tighter, leaving buyers with fewer options and giving sellers greater bargaining power.

Homes may sell more quickly, buyers may compete for the same properties, and multiple-offer situations can become more common. Sellers may be less willing to negotiate on price or other terms, while buyers may respond by making stronger offers, increasing their offered price, or reducing conditions on their home purchase offer.

Seller’s markets also tend to put upward pressure on home prices, although a high SNLR does not guarantee that prices will rise. Interest rates, affordability, economic conditions, the existing level of home prices, and changes in housing supply can all affect price movements.

A balanced market lies between buyer- and seller-favouring conditions. WOWA uses an SNLR between 40% and 60% as a general rule of thumb for a balanced market.

In a balanced market, neither buyers nor sellers have a strong overall negotiating advantage and homes are being sold at a pace that is more closely matched by the flow of new listings.

The exact thresholds are not universal. CREA currently describes an SNLR of roughly 45% to 65% as generally consistent with balanced conditions at the national level, while CMHC has historically associated ratios below 40% with buyer’s markets and ratios above 55% with seller’s markets. Local housing markets can also behave differently.

These classifications describe the balance between buyers and sellers at a particular point in time. They should not be interpreted as a measure of whether the overall housing stock is sufficient, whether homes are affordable, or whether prices would be the same in the absence of constraints on new housing supply.

An overheated housing market occurs when demand persistently exceeds the available supply of homes by a large margin, creating strong upward pressure on prices.

CMHC uses the SNLR as one of its indicators of overheating. For the Canadian market as a whole, it has associated an SNLR above 55% with a seller’s market and ratios above 70% with the upper range of seller-favouring conditions. CMHC also looks for persistent rather than temporary overheating, along with other housing market indicators.

A high SNLR by itself should therefore not be interpreted as proof that a housing market is overheated. The duration of the imbalance, inventory levels, price growth, and local market conditions also matter.

SNLR can help indicate the direction of pressure on home prices. When the ratio is high, strong sales relative to new listings generally give sellers more bargaining power and can put upward pressure on prices. When the ratio is low, buyers generally have more choice and negotiating power, which can weaken price growth or put downward pressure on prices.

In the chart below, the purple line represents the 1-year percentage change in home prices, while the light blue line shows the 12-month moving average SNLR. The green line represents buyer-favouring conditions, while the red line represents seller-favouring conditions.

GTA 12-Month Moving Average SNLR vs. 1-Year Price Change % (2006 to 2023)

The chart compares the Greater Toronto Area’s (GTA’s) SNLR and home price changes from 2006 to 2023. Historically, periods of higher SNLR have generally been associated with stronger home price growth, while lower SNLR readings have tended to coincide with weaker price growth or price declines.

Changes in home prices may also lag changes in SNLR. This makes the ratio a useful indicator of potential price pressure, but SNLR alone cannot reliably predict future home prices. Interest rates, affordability, employment, housing supply, population growth, and other market conditions can also affect price movements.

SNLR can also follow seasonal patterns. Seasonal changes should therefore be considered when comparing SNLR readings across different times of the year.

Manitoba Sales-to-New-Listings Ratio (2016 to 2023)

GTA Sales-to-New-Listings Ratio (1996 to 2023)

GTA SNLR vs. Monthly Price % Change (2006 to 2023)

GTA 12-Month Moving Average SNLR (1997 to 2023)

GTA 12-Month Average SNLR to Monthly Price % Change (2006 to 2023)

Manitoba Sales-to-New-Listings Ratio (2016 to 2023) Month Sales New Listings