Gina Cook

The average asking rent for a two-bedroom apartment across all census metropolitan areas (CMAs) combined was $2,130 per month in the second quarter of 2026, down 3.6% from the second quarter of 2025.

These findings are from the Quarterly Rent Statistics program for the second quarter of 2026. These new data are compiled for CMAs across Canada's 10 provinces.

In the second quarter, asking rent for a two-bedroom apartment decreased year over year in many CMAs, such as Abbotsford–Mission (-6.4%), Calgary (-6.4%), Montréal (-5.2%) and Vancouver (-4.1%); however, it increased year over year in other CMAs, such as Thunder Bay (+6.5%), Sherbrooke (+5.7%), Halifax (+5.3%) and Saskatoon (+5.2%). Average monthly asking rent was highest in Vancouver ($3,030), Toronto ($2,650), Victoria ($2,640) and Halifax ($2,400).

Where available, the concept of paid rent has been added to the estimates from the first quarter of 2019 onward. While asking rent refers to the price posted on major rental listing platforms, paid rent reflects the current amount paid by existing renters, typically based on a formal lease agreement and, if applicable, subsequent rent increases. Paid rent estimates for the second quarter of 2026 are available for 18 CMAs.

In the second quarter, the average asking rent for a two-bedroom apartment was higher than the average paid rent in almost all CMAs where both figures were available. The only exceptions were Calgary (asking rent of $1,890 per month and paid rent of $1,930 per month), Regina (asking rent of $1,480 and paid rent of $1,580) and Edmonton ($1,570 each). Average monthly paid rent for a two-bedroom apartment was highest in Vancouver ($2,470) and Toronto ($2,160) in the second quarter.

The number of home sales recorded over Canadian MLS® Systems decreased by 0.7% on a month-over-month basis in August 2026. Monthly activity has now remained largely unchanged since May.

“Sales activity and price trends were largely unchanged for a fourth consecutive month in August,” said Shaun Cathcart, CREA’s Senior Economist. “What has changed is the broader economic environment, with the Bank of Canada recently warning of rising inflation risks, along with doubts about the durability of recent economic growth. For borrowers, fixed mortgage rates have already increased on higher bond yields. Meanwhile, on the variable rate side, a rate hike is not only back on the table for this year but already priced in by markets. This fresh round of incoming headwinds is expected to dampen the prospects for further housing market momentum heading into 2027.”

August Highlights:

• National home sales fell by 0.7% month-over-month.
• Actual (not seasonally adjusted) monthly activity came in 6.9% below August 2025.
• The number of newly listed properties climbed 3.3% on a month-over-month basis.
• The MLS® Home Price Index (HPI) was unchanged on a month-over-month basis and was down 3% year-over-year.
• The actual (not seasonally adjusted) national average sale price was up 0.6% on a year-over-year basis in August 2026.

New listings rebounded by 3.3% on a month-over-month basis in August 2026, reversing three straight declines earlier in the summer.

On Wednesday, September 2, 2026, the Bank of Canada held its overnight lending rate steady at 2.25% where it has now remained for almost a year. This move was widely expected by analysts.

Gross Domestic Product (GDP) grew by 3.3% in the second quarter, while the unemployment rate edged down to 6.4% in July. Combined with persistently high oil prices, the risk of broader inflationary pressures and the potential impact of Canadian counter-tariffs taking effect September 8, these factors could shift the probability back towards a potential rate hike in the not-too-distant future.

Inflation fears around the world are once again already causing financial conditions to tighten. The Bank noted that, “long-term bond yields have moved up globally, including in Canada,” which means borrowers are already facing higher fixed mortgage rates, similar to what happened back in March and April 2026.

The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

The continuing conflict in the Middle East is keeping energy prices high. As well, new US tariffs and Canadian counter-measures have been announced following the breakdown of trade talks between Canada and the United States. Both situations remain fluid.

In the United States, economic growth continues to be solid, driven by consumer spending and AI-related investment. Growth in the euro area was stronger than expected in the second quarter, while China’s economy slowed. Overall, the global economy has shown resilience in the face of geopolitical headwinds, with growth broadly consistent with the July Monetary Policy Report (MPR) projection. With still-high oil prices and elevated margins for refined energy products, inflation in most countries remains high.

Financial conditions have tightened since July. Long-term bond yields have moved up globally, including in Canada. The Canadian dollar has appreciated slightly on US-dollar weakness.

As expected, Canadian economic activity strengthened in the second quarter, with GDP up by 3.3%, following very weak growth in the first quarter. While some of the recent strength reflected temporary factors, the pick-up in activity was broad-based. Consumption showed solid gains. Following several weak quarters, there was some rebound in housing activity. Exports and business investment were up sharply. Labour market conditions have improved in recent months, with the unemployment rate edging down to 6.4% in July. Still, demand for labour remains subdued and indicators point to continued excess supply in the economy.

Nationally, housing sales increased in July and new listings continued to decline. Market conditions tightened from June to July according to the sales-to-new listings ratio and months of inventory. The MLS HPI edged up modestly from June to July, its first monthly increase in 20 months.

The number of national sales reported by the Canadian Real Estate Association increased by 0.5% (sa) from June to July, a fourth consecutive monthly rise. Over this 4-month period, sales have risen by a cumulative 7.2% (sa), which is equivalent to a 23% annualized pace. Nearly 55% of the local markets we track saw sales rise from June to July, with strongest increases observed in Kingston (8.4%; sa), Brantford (6.2%) and St. Catharines (6.1%). Compared to the same month in 2025, sales fell 5.3% (nsa) in July, with annual declines recorded in 84% of the local markets we monitor, with the largest ones observed in Charlottetown (PEI; -19.2%), Lethbridge (-16.4%) and Thunder Bay (-14.7%).

National new listings declined by 1.6% (sa) from June to July, still on their downward trend that started in summer 2025. In July, new listings were 6.9% (nsa) weaker than their level in the same month of 2025. From July 2025 to July 2026, new listings declined in just above 2/3 of our tracked local markets, with the largest declines observed for Fraser Valley (-22.3%), Okanagan-Mainline (-20.7%) and Barrie (-19.7%).

Almost all (89%) feel confident they can spot fraud, but more than half (52%) admit to risky behaviours.

As fraud attempts continue to rise across Canada, a TD survey reveals a growing disconnect between confidence and behaviour – one that may be leaving Canadians more exposed than they realize. While most Canadians polled believe they can identify scams, many are still engaging in risky habits that could increase their vulnerability.

Key findings from this TD survey:

• 46% of Canadians encounter scams or fraud attempts weekly or even daily
• Nearly one-quarter (24%) say they or a family member have been the victim of financial fraud or scams in the past year
• 89% feel confident in their ability to spot fraud
• 52% admit to behaviours that could make them more vulnerable to fraud, including:
• Using public Wi-Fi to access personal or financial accounts
• Opening email attachments from unknown senders
• Clicking links in texts or emails before verifying the source
• Downloading apps or software from unfamiliar sites
• 41% say they never consult resources or educate themselves on fraud prevention

The number of home sales recorded over Canadian MLS® Systems climbed a further 0.5% on a month-over-month basis in July 2026, marking a fourth consecutive monthly gain.

“At the national level, July’s housing data was a carbon copy of the June numbers, with home sales edging up a little further, listings down, and prices remaining stable,” said Shaun Cathcart, CREA’s Senior Economist. “The more interesting story over the last few months has been below the surface of the headline national numbers, where markets across the country are generally moving back towards balance. That’s true on the Prairies, in Quebec, and on the East Coast, where a majority of sellers’ markets have been steadily cooling off over the past year. More recently, it’s also been true of the markets in B.C.’s Lower Mainland and Ontario’s Greater Golden Horseshoe, where formerly buyers’ or borderline buyers’ markets have largely shifted back into balanced market territory.”

July Highlights:

• National home sales edged up 0.5% month-over-month.
• Actual (not seasonally adjusted) monthly activity came in 5.3% below July 2025.
• The number of newly listed properties declined 1.6% on a month-over-month basis.
• The MLS® Home Price Index (HPI) edged up 0.1% month-over-month and was down 3.3% on a year-over-year basis.
• The actual (not seasonally adjusted) national average sale price was up 0.2% on a year-over-year basis in July 2026.

In this article, the Canadian Housing Statistics Program (CHSP) is releasing data on investors (i.e., owners of at least one residential property that they do not use as their principal residence) in the residential housing market by investor size. Concentration in the residential housing market is analyzed for the 2022 reference year in Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba and British Columbia.

Highlights

• Small-scale investors (individuals) owned the largest share of investment properties in terms of assessed value across all the provinces studied, except Nova Scotia, where institutional investors, or the top 0.1% of investors in terms of the value of investment properties owned in the province, owned the largest share of investment properties.
• Of the six provinces studied, institutional investors owned 0.1% (Prince Edward Island and Manitoba) to 0.4% (Ontario) of the total stock of houses. The category “houses” includes single-detached houses, semi-detached houses, row houses and mobile homes.
• Among rental properties (investment properties not for personal use), 16.6% of their assessed value was owned by institutional investors in Prince Edward Island, compared with 38.0% in Nova Scotia.
• More than half of the total assessed value of rental properties built since 2011 were owned by institutional investors in Nova Scotia (63.1%) and New Brunswick (61.5%).
• In all 12 census metropolitan areas (CMAs) analyzed, the results showed a non-concentrated and potentially competitive rental market in CMAs and their census subdivisions (CSDs). Toronto and Vancouver had the least concentrated markets.

This report is the second annual release of the New Housing Market Report series, following the initial 2024 release. Data collection was expanded to Alberta in the second half of 2025, and the results are included in this report. Data collection will be expanded to Ontario in 2026, followed by Quebec at a later stage. List and sale prices, as well as other housing characteristics, were collected for new single-detached houses, semi-detached houses, row houses and condominium apartment dwellings (including low- and high-rise condominium apartments, stacked townhomes, duplexes, and triplexes).

National highlights

Slower pace for the new home market: Nationally, the number of for-sale housing starts (for homeowner and condominium intended markets) declined 10% year over year in 2025. This decrease in starts, along with the 35% yearly increase (December 2025) in the inventory of completed and unabsorbed units, indicated a slower housing market in 2025 compared with 2024.

Living area

Single-detached houses in the range of 1,500 to 2,000 square feet were most commonly reported in most of the CMAs covered in 2025. New single-detached houses were the most common dwelling type in 2025 in all CMAs outside British Columbia covered by this report. In the British Columbia CMAs, condominium apartments were the most popular. Units in the range of 500 to 1,000 square feet were most common in the CMAs where condominium data were available.

Summary

• Home sales in Canada rose by 0.5 % from May to June, the third increase in a row following five months of decline.
• New listings decreased by 1.3% from May to June, following a 0.9% decrease the previous month.
• Active listings increased by 0.5% in June, the second growth in three months.
• The number of months of inventory (active listings-to-sales ratio) remained unchanged at 4.8 during the month, following the first decline for this indicator since October 2025 in May.
• Market conditions tightened in June in many provinces but remained balanced at the national level, which largely reflects conditions in Ontario and B.C. that remain soft, while markets in all other provinces continue to favour sellers.
• Housing starts decreased by 14.1K from 253.1K in May to 239.0K in June (seasonally adjusted and annualized), a print below the consensus calling for 255.0K. The pullback was concentrated in urban areas (-13.3K to 227.8K), although rural starts also edged lower (-0.8K to 11.1K). Within urban areas, the multi-unit and other segment accounted for most of the decline (-10.2K to 189.9K), while single-detached starts also decreased (-3.1K to 37.9K). Among the major CMAs, starts rose in Vancouver (+4.2K to 23.8K), but declined sharply in Toronto (-12.4K to 25.4K) and more moderately in Calgary (-3.9K to 28.1K) and Montreal (-1.9K to 35.4K)
• The Teranet–National Bank Composite National House Price Index^TM declined by 0.4% from May to June on a seasonally adjusted basis. Six of the eleven CMAs included in the index posted declines during the month: Vancouver (-1.4%), Victoria (-1.2%), Calgary (-0.8%), Edmonton (-0.8%), Winnipeg (-0.6%), Ottawa-Gatineau (-0.5%), and Toronto (-0.3%). Conversely, prices rose in Hamilton (+3.2%), Quebec City (+0.7%), and Halifax (+0.6%), while they remained stable in Montreal.

Housing sales (in units) increased nationally for a third consecutive month in June while new listings declined, thereby tightening market conditions modestly from May to June according to the sales-to-new listings ratio. The national (all-markets) MLS HPI stayed flat from May to June; the first time it did not post a monthly decline since February 2025.

National housing (unit) sales increased 0.5% (sa) from May to June, a third consecutive monthly rise. Sales rose by a cumulative 7% (from sa figures) over this 3-month period but, in June 2026, were still 12% (sa) below their November 2024 level, as global trade tensions started rising shortly after the U.S. elections. From May to June, nearly 60% of the local markets we track posted a rise in their sales, with the strongest ones observed for Sudbury (21.2%), Peterborough (14.8%) and Kingston (13.1%).

National new listings declined by 1.3% (sa) from May to June, still following their (mild) downward trend that started in September 2025. Sharpest monthly declines in this indicator were observed for St. John’s (NL; -17.5%), Sudbury (-10.3%) and Victoria (-8.5%). New listings declined by 1.4% (nsa) over the 12-month period ending with June 2026.

The national sales-to-new listings ratio tightened further from May to June, edging up 0.9 percentage point to 50.2%, which is still in the lower half of our estimated range for balanced conditions, where it had been trending since Spring 2022. Since the same month in 2025, this ratio tightened by 1 percentage point, but with only about 45% of tracked market also showing a tightening.

Canada Mortgage and Housing Corporation (CMHC) has been conducting its annual Mortgage Consumer Survey since 1999 with a one-year exception during the pandemic. The survey brings valuable insights on mortgage consumers’ thoughts, attitudes and behaviours regarding homeownership and the process of obtaining a mortgage.

This year, a total of 4,112 mortgage consumers were surveyed between January 7 and February 1, 2026. The interviews were conducted in both English and French, and included Canadians aged 18 or over in every region of the country who:

• are the prime decision makers in their households; and,
• had undertaken a mortgage transaction in the past 18 months.

Key highlights

1. Respondents continue to be confident about their purchase being a good long-term investment, though fewer believe the value of their home will increase over the next 12 months compared to last year.
2. It took homebuyers an average of 4.4 years to save for a down payment, mainly driven by first-time homebuyers taking longer at 4.7 year.
3. Savings and equity from previous home continue to be the main components of down payments. However, 23% of homebuyers (13% of repeat buyers and 27% of first-time homebuyers) surveyed said they received a financial gift to contribute to their down payment. 
4. There was a significant decrease in mortgage consumers who were concerned about defaulting on their payments, down to 39% from 53% in 2025.
5. Renewers were more likely (35%) to say they experienced increased financial pressure due to changes in interest rates, with their mortgage payments increasing on average by $375 a month.
6. Mortgage consumers are leveraging the use of AI (16% of those who did online research) to help with their information gathering

The number of home sales recorded over Canadian MLS® Systems edged up a further 0.5% on a month-over-month basis in June 2026. This builds on the 5.5% jump recorded in May and the 0.9% increase in April, placing national activity some 7% above where it stood in March.

“June’s housing numbers continued to build momentum following the late start to the year in May, with virtually every metric moving in the right direction,” said Shaun Cathcart, CREA’s Senior Economist. “Looking ahead, fixed mortgage rates have eased from their peak in April, and rate hikes from the Bank of Canada this year are much less likely than they were just a month ago. This is good news for borrowers. Additionally, home prices are no longer falling in most of the markets where they were previously, which had likely been keeping a lot of buyers waiting on the sidelines. As such, we continue to expect the second half of the year to be quite a bit more active than the first half, similar to sales activity in 2024 and 2025.”

June Highlights:

• National home sales edged up 0.5% month-over-month.
• Actual (not seasonally adjusted) monthly activity came in 0.9% above June 2025.
• The number of newly listed properties declined 1.3% on a month-over-month basis.
• The MLS® Home Price Index (HPI) was unchanged month-over-month and was down 3.6% on a year-over-year basis.
• The actual (not seasonally adjusted) national average sale price was up 0.5% on a year-over-year basis in June 2026.

The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.Canada’s economy is showing signs of improvement. Growth is picking up and inflation is projected to ease gradually from its recent spike. There are still important risks and uncertainties related to the war in the Middle East and US trade policy.

Since the April Monetary Policy Report (MPR), global economic prospects have been dented by higher oil prices stemming from the Middle East conflict. At the same time, the build-out of artificial intelligence (AI) is supporting economic activity in a growing number of countries. Oil prices are still lower than their peak in April but the situation in the Middle East remains volatile. The path for global inflation is highly dependent on how the conflict unfolds.

The US economy is growing at about 2½%, mostly because of strong consumption and booming AI investment. China’s economy is expanding solidly thanks to robust exports. Economic activity in the euro area has been weighed down by high energy prices, but is expected to strengthen in the second half of the year if energy prices come down as anticipated.

The Bank projects global GDP growth will slow to 2¾% in 2026, mostly because of the effects of the Middle East conflict, and recover to around 3¼% in 2027 and 2028.

Increased supply and slower demand have eased asking rents, bringing Canada’s major rental markets toward more balanced conditions. However, trends vary by segment, including building age and rent level. Conditions are expected to continue easing as new units take longer to be absorbed and competition from rental condominium apartments increases. This is creating short-term imbalances in newer, higher-priced segments.

Highlights

• Asking rents declined due to increased supply and slower population growth, while average rents for occupied units continued to rise.
• Vacancy increases are mostly concentrated in new supply, where landlord-provided incentives support absorption.
• Rental markets are easing as new completions take longer to absorb, while competition from rental condominium apartments in certain markets is creating a short-term imbalance between supply and demand in new, higher-priced segments.
• Conditions remain very tight in the lowest rent quartiles in most markets, implying little improvement in affordability.
• Tenant mobility is highest in more expensive units and more limited in lower-rent segments, despite recent gains in turnover.
• Rental demand is expected to grow, even with much lower population growth.

This article examines homeownership among recent immigrants to Canada and their pathways leading up to homeownership. It combines information from the Canadian Housing Statistics Program on homeowners in seven provinces—Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Alberta and British Columbia—with immigration data for individuals who were admitted as permanent residents from 2017 to 2021. This is the second in a series of articles published in Housing Statistics in Canada that investigate homeownership among newcomers to Canada.

Key findings

• From 2018 to 2021, the homeownership rate increased for recent immigrants and decreased for Canadian-born individuals. In Ontario, the homeownership rate for recent immigrants in the fifth year after admission rose from 35.7% in 2018 to 40.2% in 2021, while it fell from 50.7% to 47.8% for Canadian-born individuals.
• By their fifth year after admission to Canada, economic-class immigrants had homeownership rates comparable to those of Canadian-born individuals. In British Columbia, economic-class immigrants in their fifth year after admission had a homeownership rate of 40.1%, compared with 43.3% for Canadian-born individuals.
• By their fifth year after admission to Canada, recent immigrants in the Maritime provinces and Manitoba had homeownership rates similar to those of Canadian-born individuals. The homeownership gap between recent immigrants and Canadian-born individuals was larger in Ontario, Alberta and British Columbia.
• Immigrant homeownership rates varied significantly by province and by region of the world in which immigrants were born.
• Recent immigrant homebuyers had lower incomes but purchased more expensive homes than Canadian-born buyers. This difference may be associated with higher mortgage debt and lower retirement savings among recent immigrant homebuyers.

• The soft start to the year for the Canadian economy appears broad-based, underpinning 2026 real GDP growth downgrades across provinces, particularly in Ontario, B.C. and parts of the Atlantic. The picture is better in per capita terms, with positive growth expected across all provinces this year, led by Newfoundland and Labrador.
• A rebound in employment in May offered a modest lift to labour markets after a soft first quarter, but data volatility continues to cloud the underlying trends. Population growth is slowing sharply, with outright declines in Ontario, Quebec, and B.C. leading to smaller labour forces. This should help cap increases in unemployment, even as hiring slows to a near-standstill.
• The U.S.-Iran conflict has lifted global energy prices, providing a meaningful revenue and income boost to oil- producing provinces—particularly Alberta and Newfoundland and Labrador. Prices are expected to moderate through the back half of the year as Middle East tensions ease, though the outlook is highly uncertain. Higher fuel costs are weighing on households and businesses, especially in Central Canada.
• Provincial budget season has wrapped up, with deficits and net debt (both as a share of GDP) set to rise in aggregate this year. While FY 2026/27 program spending is set to gear down across provinces, weighing on GDP, committed public capital spending plans remain an important source of support. New initiatives were targeted rather than transformative, including measures such as the removal of the PST on groceries in Manitoba and tax cuts for businesses and new home purchases in Ontario. 
• Canadian home sales in the second quarter are tracking broadly in line with our prior projection, led by Ontario, while price growth is somewhat stronger. We continue to expect a gradual recovery through next year, with modest improvements in Ontario and B.C. (supported by pent-up demand), partly offset by cooling activity in other regions amid scant population growth.
• The July 1 CUSMA review deadline is nearing, but timely renewal looks unlikely as talks have yet to pick up. Trade uncertainty remains elevated as the U.S. stays committed to tariffs. Ontario, Quebec, and B.C. are most exposed given their reliance on manufacturing and trade. Still, exemptions for CUSMA-compliant goods have left Canada facing relatively low effective tariff rates, helping support export recoveries in most provinces.

• 2026 tournament could add up to C$6.5 billion to Canada's quarterly GDP
• Tourism, hospitality and consumer spending expected to drive the majority of economic boost, contributing up to C$5 billion
• Incremental growth to lift quarterly GDP by approximately 0.1 percentage points in mid‑2026

As millions of fans turn their attention to North America for the world's largest international soccer tournament, an economic boost of up to C$6.5 billion is expected in incremental quarterly GDP for Canada according to a new report from BMO Economics.

Running from June 11 to July 19, the tournament will feature 48 teams and 104 matches across North America, with Toronto and Vancouver hosting games in Canada.

"Mega sporting events of this scale don't transform economies overnight, but they do create a meaningful surge in demand over a concentrated period," said Douglas Porter, Chief Economist, BMO. "In Canada, tourism, accommodation, food services and local entertainment stand to benefit most – particularly in the host cities."

The number of home sales recorded over Canadian MLS® Systems increased 5.5% on a month-over-month basis in May 2026.

“The national sales increase from April to May was broad-based but driven disproportionately by Ontario, suggesting the HST rebate on new builds may have only briefly drawn the attention of buyers away from the existing home market,” said Shaun Cathcart, CREA’s Senior Economist. “While it was just the first month in 2026 to see any meaningful upward momentum in headline demand, under the surface conditions have been improving for some time. Sellers’ and buyers’ expectations are increasingly aligned, as evidenced by tightening sale-to-list price ratios and shorter periods between listing and sale dates. As a result, prices have largely stabilized following some softness earlier in the year.”

May Highlights:

• National home sales jumped 5.5% month-over-month.
• Actual (not seasonally adjusted) monthly activity came in 5.1% below May 2025.
• The number of newly listed properties edged down 1% on a month-over-month basis.
• The MLS® Home Price Index (HPI) inched down by 0.1% month-over-month and was down 4.1% on a year-over-year basis.
• The actual (not seasonally adjusted) national average sale price was up 1.5% on a year-over-year basis in May 2026.

Amid rising concern about housing affordability for younger Canadians, this article investigates the housing market outcomes of millennials compared with Gen-Xers and baby boomers at a similar age (25 to 39 years). Using Census of Population data from 1991, 2006 and 2021, this article examines shifts in the housing market outcomes of each generational cohort in relation to moving out of the parental home, forming families and homeownership status.

Key findings

• In 2021, the share of millennials aged 25 to 39 living in a census family with parents (16.3%) was around twice the share of baby boomers of the same age in 1991 (8.2%). This trend has occurred gradually over time and is common to the large cities studied.
• After accounting for those living with their parents, millennials had the lowest rate of homeownership (49.9%), compared with Gen-Xers (56.2%) and baby boomers (55.9%) when they were aged 25 to 39 years.
• Fewer millennials aged 25 to 39 were married with children (26.6%) compared with Gen-Xers (34.5%) and baby boomers (46.6%) when they were the same age―the household type with the highest rate of homeownership historically.
• Millennial homeowners, after accounting for those living with their parents, were less likely to live in single-detached houses relative to earlier generations, especially those living in Toronto and Vancouver.

The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

The conflict in the Middle East is now in its fourth month. The resulting increases in energy prices and disruptions in global supply chains are weighing on global economic growth and pushing up inflation. At the same time, the US administration continues to propose new tariffs and trade policy uncertainty remains elevated.

In the United States, economic growth remains solid, supported by consumption and AI‑related investment. In the euro area, growth is subdued, with higher energy prices weighing on activity. China’s economic growth continues to be supported by strong exports.

Canadian financial conditions have loosened since the April Monetary Policy Report. Global equity markets have been buoyant and bond yields remain volatile. The Canadian dollar has weakened against the US dollar and other currencies.

In Canada, GDP edged down by 0.1% in the first quarter, weaker than expected at the time of the April MPR. Consumer spending grew 1.4% but government spending unexpectedly declined. Housing activity also declined and business investment remained weak. Exports fell while imports rose strongly as inventories were rebuilt. Employment was up in May, but looking through monthly volatility, employment in Canada is little changed since the start of the year. The unemployment rate continues to fluctuate in the 6 ½%-7% range with the most recent reading at 6.6% in May.

Key developments in Canada’s residential mortgage market in 2025 and the outlook for 2026:

• In 2025, the mortgage market activity was dominated by renewals of existing mortgages, rather than new mortgages taken out by homebuyers.
• Renewal volumes are expected to ease in 2026. Borrowers renewing after a 5-year term are likely to face a similar interest-rate shock as those who renewed in 2025.
• Insured mortgage activity increased compared to uninsured lending. New eligibility rules made it easier for first-time homebuyers and new home buyers to qualify for mortgage insurance.
• The national 90+ days mortgage delinquency rates increased in 2025. The increase was largely concentrated in Ontario, especially Toronto, where households faced growing payment pressures.
• Despite the increase, 90+ days delinquency rates remain low by recent standards. Delinquencies on non-mortgage products – often a predictor of mortgage defaults – are rising but at a slower pace.
• Canada’s residential mortgage debt exceeded $2.4 trillion in December 2025, reaching a new high.
• Overall, borrower stress is increasing due to softer labour-market conditions and accumulated exposure to higher interest rates. The system is more rate-sensitive, but remains structurally stable.

Key trends to watch

The following factors may influence the performance of Canada’s residential mortgage market in the coming years:

• Upcoming renewal cycles, particularly borrowers rolling into new rates through 2026–27.
• Labour market conditions, given their close relationship with arrears.
• Shifts in insured mortgage activity, including amortization trends and eligibility effects.
• Performance of nonbank lenders, especially where borrower profiles differ from banks.

• Home sales in Canada edged up by 0.7% from March to April, the first increase in six months.
• New listings increased by 4.1% from March to April, following stabilization the previous month.
• Active listings increased by 2.7% in April, the third increase in four months.
• The number of months of inventory (active listings-to-sales ratio) edged up from 5.1 to 5.2 during the month, its highest level since April 2019 (excluding the pandemic).
• Market conditions loosened slightly in April but remained balanced at the national level, which largely reflects soft conditions in Ontario and B.C., while markets in all other provinces continue to favour sellers.
• Housing starts increased by 39.6K from 239.7K in March to 279.3K in April (seasonally adjusted and annualized), a print well above the consensus calling for 245.0K. This rebound was driven by a pickup in urban areas (+37.8K to 265.6K), while rural areas also edged higher (+1.8K to 13.7K). The increase in urban areas was concentrated in the multi-unit segment (+39.7K to 229.1K), while the single-detached segment edged lower (-2.0K to 36.5K). Housing starts rose sharply in Toronto (+19.1K to 37.4K) and Vancouver (+4.7K to 25.8K), while they declined in Calgary (-5.7K to 14.9K) and Montreal (-1.7K to 28.0K).
• The Teranet–National Bank Composite National House Price fell by 0.7% from March to April on a seasonally adjusted basis. Six of the eleven CMAs included in the index recorded declines during the month: Winnipeg (-2.3%), Calgary (-1.2%), Toronto (-1.1%), Vancouver (-0.7%), Montreal (-0.5%), and Hamilton (-0.3%). Conversely, prices rose in Halifax (+2.4%), Ottawa-Gatineau (+1.1%), Victoria (+0.4%), Edmonton (+0.1%), and Quebec City (+0.1%).

CANADA HOUSING MARKET: EXISTING HOME SALES INCREASED IN APRIL, BUT TOO SOON TO SHOUT ‘RECOVERY’

Housing sales increased nationally in April after five months of consecutive declines. But both indicators of market conditions we report suggest still-soft conditions nationally. The MLS HPI for all markets continued to decline in April.

The number of housing sales (in units) increased 0.7% (sa) from March to April, its first monthly rise since October 2025. Sales increased in 17 of the 31 markets we track from March to April, with the strongest increases posted in Barrie (18.8%), St. Catharines (18.2%) and Charlottetown (PEI; 16.6%). National sales declined -4% (nsa) over the 12-month period ending in April 2026. 

In April, national new listings posted a 4.1% (sa) monthly increase with above ¾ of the local markets we track contributing to this rise, with at least 10% increases observed for Quebec City (12.4%), Kitchener-Waterloo (10.5%), Ottawa (10.2%) and Peterborough (10%). New listings also edged up 0.2% (nsa) nationally over the 12-month period ending with April.

With new listings increasing at a faster pace than sales from March to April, the national sales-to new listings ratio (SNLR) was pushed down to 45.6% (sa). This figure is close to our estimated lower bound for the balanced conditions’ range (estimated at 44.7%), and very close to its lowest print since early 2009, when Canada was in a recession. Nearly ¾ of the monitored local markets have seen their SLNR declined from March to April.

The number of home sales recorded over Canadian MLS® Systems was up 0.7% on a month-over-month basis in April 2026.

“While home sales were up only modestly from March to April, the small increase reflected a slow start to the month with a stronger handoff into May, alongside falling days on market and stabilizing prices,” said Shaun Cathcart, Senior Economist with the Canadian Real Estate Association (CREA). “This latest bout of global economic uncertainty and higher mortgage rates means the previously expected rebound in housing markets this year will continue to be muted, but it does not mean there will be no upward momentum at all.”

April Highlights:

• National home sales edged up 0.7% month-over-month.
• Actual (not seasonally adjusted) monthly activity came in 4% below April 2025.
• The number of newly listed properties jumped 4.1% on a month-over-month basis.
• The MLS® Home Price Index (HPI) edged down 0.1% month-over-month and was
• down 4.2% on a year-over-year basis.
• The actual (not seasonally adjusted) national average sale price was up 2.2% on a
• year-over-year basis in April 2026.

Canada’s housing starts made meaningful gains in 2025. Record rental construction and more missing middle housing added important new supply, building on the momentum highlighted in the Fall 2025 Housing Supply Report.

At the same time, ownership-oriented construction weakened overall. Short-term imbalances continued in several markets. Rising unsold inventories suggest today’s supply may not align well with buyers’ needs, while tighter financing conditions and project cancellations threaten future supply.

This report focuses on both sides of that story: where Canada is succeeding in expanding housing options and where further progress is needed to ensure long-term supply and affordability.

Highlights

• Canada’s housing starts rose 6% in 2025, driven by record rental and expanding missing middle construction. Building timelines improved. High completion levels added important supply, especially in Vancouver, Calgary and Edmonton.
• Major vulnerabilities lie underneath this progress. Condominium presales collapsed, unsold inventory surged and financial conditions tightened. These pressures threaten the future pipeline of ownership-oriented housing supply, particularly in Toronto and Vancouver.
• Slower population growth, cautious buyers and elevated construction costs shaped supply decisions, pushing developers towards smaller apartments while limiting family-sized, ground-oriented homes.
• Looking ahead, near‑term supply imbalances are expected to ease as new supply is absorbed, helping affordability in the long run.

CANADA HOUSING MARKET: STILL WAITING FOR A NATIONAL HOUSING MARKET RECOVERY

National housing sales and the MLS Home Price Index continued to decline in March, reflecting continued weakness in market conditions.

The number of national housing sales posted its fifth consecutive monthly decline last month, edging down by -0.1% (sa figures) from its February level, while it declined by -2.3% (nsa) since March 2025. From February to March, sales declined in 17 of the 31 local markets we track. National new listings also edged down by -0.2% (sa) between February and March and posted a -4.9% (nsa) decline since March 2025.

With almost identical monthly declines (in %) in both sales and new listings, the national sales-to-new listings ratio stayed constant at 47.8% (sa) from February to March, still in the lower half of the estimated balanced conditions range. This indicator of market conditions has hovered in this lower-half range since December 2024, and also frequently since Spring of 2022. From February to March and according to this indicator, market conditions eased in 14 of the local markets we monitor and tightened in 17 of them. It also suggests 14 of these local markets were balanced in March and the same number were favouring buyers, all in B.C. and Ontario. Only 3 markets—Regina, Saskatoon and St. John’s (NL)—were assessed as sellers’ favourable.

The other indicator of market conditions we report—months of inventory—stayed unchanged at 5.0 from February to March, very close to its long-term pre-pandemic average of 5.2, hence also suggesting balanced conditions. But despite being essentially balanced at national level, this indicator continues to mask significant divergences across provinces with British Columbia and Ontario showing figures above their long-term average and the other provinces showing below average figures.

The national MLS House Price Index (HPI) declined -0.4% (sa) from February to March, continuing its downward trend that started in the second half of 2023. As in many previous months, all unit types contributed to both the monthly and 12-month declines in the national MLS HPI. Over the 12-month period ending in March of this year, this price index declined -4.7% (nsa). Its trend profile reflects the weakening market conditions mainly coming initially from the lagged effects from the rise in interest rates until Fall of 2023, and subsequently from slower population growth and the rise in global trade and geopolitical tensions since early 2025.

The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

The evolving conflict in the Middle East is causing heightened volatility and US trade policy continues to reshape global trade patterns. Both are ongoing sources of uncertainty. The Bank’s April outlook assumes tariffs remain unchanged and the global benchmark price of oil declines to US$75 per barrel by mid 2027.

The Iran war has led to sharply higher energy prices and transportation disruptions, diminishing growth prospects in oil-importing countries and boosting inflation worldwide. In the United States, growth is still expected to be solid over the projection horizon, boosted by AI-related investment and consumption growth. China’s economy is being supported by robust exports. In the euro area, higher prices for oil and natural gas will weigh on economic activity.

Financial conditions have been volatile, reflecting daily developments in the Middle East and shifting market expectations for inflation and interest rates. Bond yields are modestly higher since January while equity markets, which weakened sharply at the outset of the war, have recovered. Since the start of the war, the US dollar has appreciated against most major currencies. The Canada-US exchange rate has been relatively stable.

Overall, the global economy is expected to grow by about 3% in 2026, 2027 and 2028. Projections for inflation over the next year are revised up because of the jump in energy prices.

• Weaker-than-expected performances in 2025Q4 and especially 2026Q1 have prompted a steep downgrade to our forecasts for 2026 annual average Canadian home resales and price growth. While severe weather in Central and Atlantic Canada weighed on activity early in the year, weakness was also evident in B.C., where conditions were more temperate. Sales are likely to take most of the year to recoup first quarter losses, as housing remains constrained by a subdued economy, heightened uncertainty, and ongoing cost of living pressures.
• Interest rates are expected to be a largely neutral factor for the outlook in 2026, with the Bank of Canada likely to remain on hold and no major movements expected in bond yields (which help determine fixed mortgage rates).
• Canada’s population declined last year for the first time since Confederation, driven by losses in Ontario and B.C.. Softer rental demand and falling rents are discouraging investor activity in both provinces. Alberta stands out, with the strongest population growth nationally, supported by immigration. Interprovincial migrants continue to flow into the province, bolstering ownership demand.

The number of home sales recorded over Canadian MLS® Systems was virtually unchanged (-0.1%) on a month-over-month basis in March 2026.

“Home sales activity remained at lower levels in March, as rising global economic uncertainty, along with a mid-month jump in fixed mortgage rates tied to incoming higher inflation, piled on to an already shaky economic start to the year,” said Shaun Cathcart, CREA’s Senior Economist. “2026 is still expected to see a modest amount of upward momentum in sales and a stabilization in prices as some pent-up first-time buyer demand enters the market, but the forecast for the year has had to be revised downward. The timing of higher mortgage rates, along with the perception they may be temporary, could keep would-be buyers away at the most active time of year – April, May, and June – as they wait for rates to come back down.”

March Highlights:

• National home sales were almost unchanged (-0.1%) month-over-month.
• Actual (not seasonally adjusted) monthly activity came in 2.3% below March 2025.
• The number of newly listed properties edged down 0.2% on a month-over-month basis.
• The MLS® Home Price Index (HPI) fell 0.4% month-over-month and was down 4.7% on a year-over-year basis.
• The actual (not seasonally adjusted) national average sale price was down 0.8% on a year-over-year basis in March 2026.

The provincial budget season is winding down, with just PEI and Newfoundland and Labrador still to table their FY26/27 documents. Here are five themes:

Deep deficits persist: A few provinces are slipping deeper into the red, while a few are moving to slightly shallower shortfalls. As a group, the chunky $40 billion deficit for the fiscal year just ending (FY25/26) will persist in FY26/27, with a combined shortfall of $46.7 billion expected. That’s a manageable 1.4% of GDP, but topped only twice in the past two decades: at the depth of the pandemic, and the depth of the financial crisis.

Certainly uncertain: This year’s budget season acknowledged the wild uncertainty in macroeconomic conditions. But, unlike last year, where every province seemingly took a different approach to setting an economic outlook (assume tariffs, no tariffs, publish different scenarios, etc.), this year was largely based on a ‘normal’ baseline economic outlook and a status quo on trade policy. With that in mind, the group overall has embedded more than $10 billion of contingencies into the FY26/27 fiscal plan, leaving some room for upside if the economy holds up.

Revenue gusher (for some): The two big oil-producing provinces locked in their budgets ahead of the conflict in Iran and associated surge in oil prices. Now, budget assumptions look wildly conservative. Alberta assumed $60.50 for WTI this fiscal year and Saskatchewan assumed $59.80 (Newfoundland & Labrador still to be tabled). At current levels for WTI, the light-heavy differential and the loonie, we could see upwards of $20 billion of revenue upside in those two provinces alone, swinging both well back into surplus.

Debt climbing: The combined provincial net debt-to-GDP ratio is looking to push 32% in FY26/27, which would be a fourth consecutive increase from the post-pandemic lows. Recall that there was meaningful fiscal consolidation during that period when inflation and nominal growth were ripping. Interestingly, debt ratios don’t look any worse than they did a year ago thanks to hefty upward nominal GDP revisions, but the provinces are clearly still open to borrowing. This year’s long-term borrowing program is on pace to run at around $140 billion, just a shade lower than seen over the prior two years and the pandemic high. Indeed, while the combined provincial deficit is running at $47 billion this fiscal year, combined net debt is going to surge by $80 billion, or 2.5% of GDP, which is more reflective of underlying finances. Combined with the federal government, this truer fiscal gap in Canada is closer to 4.5% of GDP.

Policy steady: There were no show-stopping policy changes at the provincial level this budget season. While there were no major tax changes, some provinces nudged taxes higher (e.g., B.C. broadening the PST base and lifting income taxes), while others pushed through some targeted policy (e.g., Ontario expanding the HST rebate on new homes to all buyers). In general, the provinces continue to focus heavily on infrastructure, still catching up to past population growth (hence the hefty borrowing program), while program spending looks to run strong at more than 4% overall. The federal government continues to do more of the stimulus leg work, and that could continue with any new measures announced in the upcoming federal fiscal update.

Although Canada faces near-term hurdles to its plans to increase AI data center infrastructure due to constrained generation and transmission capacity, the country is not out of the race to attract more of the expected capital expenditures on data centers. Many countries are also dealing with similar grid constraints, which means that regions that can adapt their electricity sectors quickly to enable new large loads to connect to supply in a timely manner will come out ahead.

This situation creates an opportunity for Canada to create conditions that can enable faster data center connection to the grid or to off-grid alternatives. The ‘bring your own generation’ model that is being explored by Alberta is one such promising tool. Data center companies in Texas are already opting for this option as it is faster than waiting to be connected to the grid. Also, other regions are considering it as a way to shelter ratepayers from the costs of building new generation and transmission for data centers. Ontario, on the other hand, can lean on its advantage as the first jurisdiction in North America to build a small modular reactor (SMR). One way to do this would be to include SMRs in the new corporate power purchase agreements program, which allows companies to procure their own generation. The proposed 40 GW offshore wind farm in Nova Scotia is another potential generation source that could support a data center industry in Atlantic Canada.

Whatever policies and tools are used, protecting ratepayers from electricity price increases will be important for gaining public support. Governments can look to jurisdictions in the U.S. and elsewhere for lessons on what can be done differently to avoid repeating actions that have contributed to rising retail electricity prices in other markets like the PJM Interconnection.

This week’s data releases and Bank of Canada (BoC) statement describe a world that could have been, with a domestic backdrop that showed signs of easing inflation. The war in Iran has upended that. With escalatory strikes on energy infrastructure this week, WTI oil prices are holding at $94 (as of the time of writing). All the focus is now on how big and persistent the energy shock will be – with the prospect of stagflation looming.

It is unfortunate that households and businesses will face this new pinch, because this morning’s retail sales data sent some positive signals. Real volumes posted a solid gain in January, taking the three-month gain to 7.7% (annualized) and February’s preliminary estimate of the nominal figure showed another solid month could be expected. After a year of fits and starts, it looks like things were just starting to turn a corner. The expected surged in gasoline and energy prices in March will muddy the picture and likely eat into the real spending figures in the months ahead.

The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

The war in the Middle East has increased volatility in global energy prices and financial markets, and heightened the risks to the global economy. The breadth and duration of the conflict, and hence its economic impacts, are highly uncertain.

Prior to the war, the global economy was on pace to grow at around 3%, as expected in the January Monetary Policy Report (MPR). Economic growth in the United States has moderated but remains solid, driven by consumption and strong AI-related investment. US inflation remains above target and has evolved largely as expected. In the euro area, domestic demand is supporting growth while exports have contracted. China’s economy continues to be boosted by strength in exports, but domestic demand remains weak.

Since the outbreak of the conflict in the Middle East, global oil and natural gas prices have risen sharply, and this will boost global inflation in the near-term. In addition to energy supply disruptions, transportation bottlenecks stemming from the effective closure of the Strait of Hormuz could impact the supply of other commodities, such as fertilizer. Financial conditions have tightened from accommodative levels. Global bond yields have risen, equity market prices have declined, and credit spreads have widened. The Canada-US dollar exchange rate has remained relatively stable.

From CMHC

Structural barriers continue to slow progress

Policies on funding, zoning reform and the Housing Accelerator Fund have contributed to progress on housing. However, delivery remains slow due to structural barriers like long permitting times and inconsistent zoning, even as policy momentum builds. Innovation and scaling in private and non-profit sectors are crucial to boosting productivity.

Canada must double housing starts annually by 2035 to close the supply gap. While momentum is growing, bold action and stronger coordination are needed to turn plans into results.

Canada’s housing delivery system

Even with incentives, Canada’s build pipeline is slow to respond. There are signs of progress in some markets like Montréal and Ottawa, but system-wide barriers remain. To accelerate delivery and close the supply gap, we need faster approvals, modernized permitting, better municipal data and scalable innovation in construction. Scale remains a key challenge across much of the construction sector.

Shifts in housing starts and rental markets

Housing starts were strong early in 2025 but slowed down later in the year. Toronto and Vancouver were hit hardest, with year-over-year numbers going down. Among key reasons for the slow-down were high interest rates, labour and material shortages, developer uncertainty and the cancellation of marginal projects. Meanwhile, starts remained strong in Alberta.

2025 saw the first meaningful easing in rental conditions but affordability remains tight. Rental market indicators are moving in the right direction overall, with vacancy rates going up and rent growth slowing, showing that the market is balancing out. However, we need to consider sustaining the market and rental supply in the long term.

By TD Economics

Highlights

• We’ve modestly upgraded our home sales growth forecasts for the second half of the year across Canada. This represents the assumption that pent-up demand that was sidelined in a weaker-than-expected first half returns to the market. The data is cooperating with this narrative, with Canadian home sales up 4% m/m in May after inching higher in April. However, uncertainty remains elevated, and job markets are deteriorating. As such, even if sales levels improve, they are likely to remain subdued, particularly in B.C. and Ontario.
• We’ve nudged up our average home price growth forecasts in markets outside of B.C. and Ontario for the back half of the year, as sales gains interact with supply/demand balances that favour sellers in these regions. We’re retaining our view that quarterly price growth will be the firmest in the Prairies in the second half of 2025.
• In contrast, 2025H2 home price growth is seen as declining, on average, in B.C. and Ontario. Supply/demand balance indicators suggest that there is too little demand chasing too much supply in these markets, leaving buyers with some power in negotiations. We could see a compositional boost to prices (i.e. sturdier sales gains for more expensive properties that upwardly pressure average prices), particularly in Ontario, however. This reflects the assumption of some underperformance in the less-expensive GTA condo market due to weak investor demand.
• We’re expecting stronger growth in Canadian home sales and average home prices in 2026, backed by an improving economy, reduced uncertainty, and a modest downdraft in yields from their current levels. However, the scale of bounce-back in Canadian average home prices will likely be restrained by poor affordability in key markets like B.C. and Ontario. What’s more, population growth should remain weak next year, restraining rent gains and preventing any notable recovery in investor demand.
• We expect the federal government’s housing plan to boost supply. However, given that the federal budget will only land this fall, along with lags inherent in the homebuilding process, we wouldn’t expect a material boost to housing completions until perhaps late next year (at the earliest). Absent a steep recession, any significant improvement in housing affordability would take time and require a sustained ramp up housing construction.

The Canadian economy ended 2024 strong. However, the escalating trade conflict is diminishing growth prospects. While tariffs are expected to increase price pressures, removing the consumer carbon tax has lowered energy prices. The unpredictability of US trade policy, and the speed and magnitude of the shifts, are making the economic outlook very uncertain.

In February and March 2025, the United States repeatedly threatened, imposed and then suspended tariffs on Canada and Mexico. Significant US tariffs remain in place, particularly on steel, aluminum and motor vehicles. Then, on April 2, the United States announced high and broad-based tariffs on nearly all its other trading partners. One week later, on April 9, it reduced most of those tariffs for 90 days to a 10% universal rate. This universal tariff does not apply to Canada and Mexico. There is a great deal of uncertainty around what will happen next.

Trade policy uncertainty is making it difficult for households, businesses and governments to plan. It is also difficult to know how the tariffs will affect the economy. Consequently, it is unusually challenging to project economic activity and consumer price index (CPI) inflation in Canada and globally.

Instead of a base-case projection, this Report contains two illustrative scenarios that consider different US trade policies. In addition, the Risks section focuses on the uncertainty related to how tariffs will impact the economy. The Bank of Canada has chosen this approach to better manage the risks in this highly uncertain environment.

HIGHLIGHTS

• Renewal risk remains as 1.2 million mortgages will come up for renewal in 2025. Most of these will experience higher interest rates than when their term began: 85% of those were contracted when the Bank of Canada rate was at or below 1%.
• The mortgage delinquency rate continued to rise from historic low levels in 2024, reaching 0.19% in the second quarter, with delinquency rates on other credit products, and allowances for expected credit losses both suggesting it will continue to increase through 2025. However, this remains below pre-pandemic levels and well below averages since 1990.
• Traditional lenders experienced two very different quarters to begin 2024. The first quarter showed higher risk lending compared to 2023, but in the second quarter newly extended mortgages had lower risk based on traditional risk metrics.
• Overall mortgage debt increased to $2.2 trillion in July 2024, which exacerbates the vulnerability of elevated household debt. This growth (3.5% year-over-year) is below recent averages, but lower interest rates could accelerate the increase.
• Alternative lenders saw an increase in lending during the first quarter of this year compared to the fourth quarter of 2023, indicating renewed momentum to sustain their market share from a year ago. However, their risk profile has increased compared to last year.
• Mortgages with terms of three or more years but less than five years are the most popular, with over half of new mortgages having terms in this range. The traditional five-year, fixed-rate mortgage and variable rate mortgage both represent a small share of the newly extended loans.

For the second time in as many meetings, the Bank of Canada lowered the target for the overnight rate by 25 basis points, a decision in line with the consensus and market expectations. The rate reduction brings the policy rate to 4.50%, fully unwinding the two rate hikes delivered in June and July 2023. This move also pushes the BoC’s policy rate 100 bps below the Federal Reserve’s (based on the upper bound target), marking the largest negative gap since the late 1990s. Despite the consecutive cuts and upward pressure on CORRA, balance sheet normalization will continue (as expected). Here are additional highlights from the communique and the opening statement to the press conference:

• Driving the decision to cut was “broad price pressures continuing to ease” and “ongoing excess supply lowering inflationary pressures”.
• Once again, there wasn’t really any forward rate guidance in the press release but the opening statement to the presser reiterated that “it is reasonable to expect further cuts” if inflation eases in line with their forecast. He added that “downside risks are taking on increased weight in our monetary policy deliberations”. Note that the statement dropped the focus items that they’d previously been referring to (i.e., the balance between demand and supply, inflation expectations, wage growth, and corporate pricing behaviour). Instead, “incoming information” will guide future decisions.
• The statement notes that excess supply is growing: “With robust population growth of about 3%, the economy’s potential output is still growing faster than GDP, which means excess supply has increased.”
• On the labour market, they highlight that “there are signs of slack” with labour force growth outpacing employment and job seekers having more trouble finding work. “Wage growth is showing some signs of moderating but remains elevated.”
• As for inflation, the statement notes that “broad inflationary pressures are easing” although shelter and some services inflation remains elevated. “Governing Council is carefully assessing these opposing forces on inflation”.

From National Bank of Canada

The Teranet-National Bank Index continued to decline in February so that the cumulative decline in prices since their peak in May 2022 totaled 11.2%, the largest contraction in the index ever recorded. The current decline in prices has even surpassed the 9.2% loss in value that occurred during the 2008 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory well into 2023 and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still anticipate a total correction of about 15% nationally by the end of 2023, but this assumes that policy rate hikes are over and declines begin at year-end. Although corrections are being seen in all markets covered by the index, the CMAs that have seen the largest price growth over the past two years are also those that have seen the largest declines to date. Ontario, British Columbia and the Maritimes thus appear to be more vulnerable, while the Prairie markets are less vulnerable, as affordability issues are less acute.

HIGHLIGHTS:

• The Teranet-National Bank Composite National House Price Index™ decreased by 0.5% in February compared to the previous month and after seasonal adjustment, the tenth consecutive monthly decrease.
• After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Toronto (-2.7%), Calgary (-2.4%), Halifax (-1.8%). Edmonton (-0.8%), Hamilton (-0.3%), Montreal (-0.3%) and Ottawa-Gatineau (-0.2%). Conversely, prices increased in Vancouver (+3.8%), Victoria (+1.9%) and Quebec City (+0.1%), while they remained stable in Winnipeg.
• From February 2022 to February 2023, the composite index decreased by 4.7%, the second consecutive month in which the annual change in the index was in negative territory. Price increases in Calgary (8.8%), Quebec (5.0%). Edmonton (1.9%) and Montreal (0.8%) were entirely offset by decreases in Victoria (-1.4%), Ottawa-Gatineau (-2.3%), Winnipeg (-2.7%), Halifax (-3.2%), Vancouver (-3.9%), Toronto (-8.8%), and Hamilton (-14.0%).