Manjot Singh Gill

The Ontario government is continuing to lower costs and help families realize the dream of homeownership by removing the full 13 per cent of the Harmonized Sales Tax (HST) for eligible buyers of new homes valued up to $1 million, for a maximum rebate of $130,000, as part of the upcoming 2026 Budget. This maximum rebate of $130,000 would be maintained for new homes valued up to $1.5 million, and would decrease proportionally from $130,000 at $1.5 million to a maximum of $24,000 for homes valued at $1.85 million and above, building on the province and federal governments previous move to rebate the HST for all first-time buyers of new homes up to $1 million. https://news.ontario.ca/en/release/1007212/ontario-expanding-hst-rebate-to-lower-the-cost-of-new-homes-in-partnership-with-the-federal-government

This weeks 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 mornings 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 Februarys 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. https://economics.td.com/ca-weekly-bottom-line

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. Chinas 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. https://www.bankofcanada.ca/2026/03/fad-press-release-2026-03-18/

While housing costs ease slightly nationally, they remain near historic highs in Ottawa, Montral and Halifax For years, weve heard that housing affordability in Canada has hit rock bottom. Despite some recent improvements, the new CMHC Housing Affordability Composite Index, launched today, shows it remains a major challenge. But this blanket statement overlooks how much housing affordability has eroded in Ottawa, Montral and Halifax in recent years. Its clear the crisis is no longer limited to Toronto and Vancouver. Housing affordability is shaped by several factors, not only how much housing is costing. It also includes having enough income to pay rent or a mortgage. It depends on supply and demand factors that determine how easy or hard it is to find a housing unit at a given price. In addition, it considers discretionary income that can be used to make space for a greater housing budget. While many housing affordability indexes exist in Canada, most are based on a single indicator, resulting in an incomplete picture of the issue. Many also focus only on homeownership affordability, overlooking the rental housing market segment. This approach misses a key component of housing in Canada and the potential interactions between the rental and homeownership market segments. https://www.cmhc-schl.gc.ca/observer/2026/beyond-toronto-vancouver-affordability-challenges-spread-across-canadian-cities

Highlights: Canadian housing affordability posted an eight consecutive improvement in Q425. This was the longest streak of improving affordability ever recorded in the country. The mortgage payment on a representative home as a percentage of income (MPPI) fell 0.4 percentage points. Seasonally adjusted home prices rose 0.4% in Q425 from Q325; the benchmark mortgage rate (5-year term) increased 4 basis points, while median household income rose 0.8%. Affordability improved in 6 of the ten markets in Q4. On a sliding scale of markets from best progression to least: Vancouver, Calgary, Toronto, Edmonton, Victoria and Hamilton. On the flip side, Quebec City and Ottawa/Gatineau deteriorated in the fourth quarter, while Montreal and Winnipeg remained unchanged. Countrywide, affordability enhanced by 0.6 pp in the condo portion and 0.4 pp in the non-condo segment. Housing affordability improved again in the final quarter of 2025, marking an eighth consecutive quarterly gain, the longest streak on record. The mortgage payment as a percentage of income fell to 51.6%, its lowest level in almost four years. Even with the recent improvement, affordability remains well above the long-term average of 40.5% since 2000. The latest progress in affordability came despite a modest increase in national home prices, the first in three quarters. The 5-year mortgage rate reversed the prior quarters 4-basis-point increase, declining by the same amount in Q4. This represented the seventh improvement in financing costs in the past eight quarters, offering a slight boost to affordability. With this latest movement, borrowers are financing at rates approximately 22 basis points lower than a year earlier. Income gains, however, contributed more to the improvement in the quarter than changes in interest rates. Although incomes have lagged home price growth in recent years, the gap has been narrowing, and the home-price-to-income ratio now stands at its most favourable level in five years. Affordability trends varied across regions. Vancouver and Calgary posted the largest quarterly declines in the mortgage payment as a percentage of income, helped in part by lower home prices. Toronto also enjoyed a sharp improvement despite the stabilization in home prices. In contrast, affordability worsened in Qubec City and Ottawa-Gatineau, where price growth more than offset the impact of higher incomes and lower financing costs. Most of the improvements in the last year have occurred in the markets that were the most stretched, rather than in areas with relatively more affordable housing. This pattern may continue in 2026, as ongoing softness in the Toronto and Vancouver resale markets does not suggest an imminent rebound in prices especially with the ongoing slowdown in population growth. Looking ahead, assuming tepid home price increase changes over the next year at the national level, income growth is expected to remain the primary driver of further improvements in affordability, as interest rates are unlikely to provide much additional support. The Bank of Canada has indicated it is comfortable with its current stance on monetary policy and persistent government deficits worldwide could exert upward pressure on longer-term yields. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

CANADA HOUSING MARKET: NATIONAL HOUSING CONDITIONS CONTINUE TO COOL National unit sales significantly fell from December to January. This weakening in sales combined with a sharp rise in new listings contributed to lower the sales-to-new listings ratio to near the lower bound of the estimated range for balanced conditions. However, unusually inclement weather in Ontario centres contributed to amplify the slowdown in national sales in January. National sales (in units) posted a -5.8% (sa) drop from December to January. They weakened in each of the last 3 months, posting a cumulative -10.2% decline (with sa figures) since October 2025. In January, they were 16.2% below their level in November 2024, the period when trade tensions started to emerge as the incoming U.S. administration announced its intention to increase tariffs on imports from key economic partners. Compared to the same month in 2025, national sales were 16.2% (nsa) lower in January. Following 4 months of monthly declines, new listings rose sharply in January (7.3% m/m, sa) but fell 6.2% (nsa) from the same month in 2025. With this significant decline in sales and the sharp rise in new listings from December to January, the sales-to-new listings ratio fell from 51.3% (sa) in December to 45% in January, a 6.3 percentage points (pps) drop. This indicator of housing market conditions now stands very close to our 44.6% estimate for the lower bound of the balanced conditions range. This indicator declined by 4.1 pps (from sa figures) since January of 2025. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-news-flash.february-18--2026.html

Highlights According to the 2022 Canadian Housing Survey, one-third (33.3%) of households reported moving to their current residence within the past five years. Upgrading to a larger or better-quality dwelling was the most common reason reported by households that moved within the past five years, cited by one in four moving households (25.3%). Among households that moved across provinces, employment (42.5%) was the reason cited most often, followed by wanting to be closer to family (27.6%). In contrast, 4.5% of these households reported moving to upgrade to a larger or better-quality dwelling. Movements within the same province but to a different municipality showed patterns that resembled aspects of interprovincial migrations and moves within the same municipality, further supporting the relevance of distance in a households decision to move. Reasons for moving also varied by age of the reference person, and further differences emerged when distinguishing intraprovincial and interprovincial moves. Findings suggest that in addition to the motivation to improve housing conditions and quality of life, various life events and stages of life can influence a households decision to move. https://www150.statcan.gc.ca/n1/pub/91f0015m/91f0015m2026001-eng.htm

Home sales fell 5.8% from December to January, marking the third consecutive monthly decline and the largest drop since February 2025 when U.S. tariffs were announced. New listings jumped 7.3% from December to January, their first increase in five months and the largest monthly increase since January 2025. Active listings increased by only 0.4% during the month due to a higher number of cancelled listings, likely due to the lack of momentum in the market. Market conditions eased during the month 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 dropped by 42.6K from 280.7K in December to 238.0K in January (seasonally adjusted and annualized), a print well below the consensus calling for 262.5K. Starts decreased in urban areas (-50.2K to 218.2K), while they increased in rural areas (+7.6K to 19.9K). In urban centres, the drop stemmed from the multi-unit segment (-51.9K to 177.0K), while the single-detached segment increased slightly (+1.7K to 41.2K). Decreases in housing starts were seen in Montreal (-11.5K to 17.6K), Toronto (-1.3K to 28.4K), and Vancouver (-0.4K to 33.5K), while Calgary (+10.2K to 25.6K) registered an increase. The TeranetNational Bank Composite National House Price Index declined by 0.4% from December to January after seasonal adjustment. Seven of the eleven CMAs included in the index recorded declines: Ottawa-Gatineau (-2.4%), Winnipeg (-1.0%), Toronto (-0.9%), Edmonton (-0.9%), Vancouver (-0.7%), Hamilton (-0.5%), and Victoria (-0.1%). Conversely, prices rose in Halifax (+2.0%), Quebec City (+1.6%), Montreal (+1.4%) and Calgary (+0.7%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

The number of home sales recorded over Canadian MLS Systems fell 5.8% on a month-over-month basis in January 2026. The monthly decline in national home sales was driven primarily by less activity in the Greater Golden Horseshoe and Southwestern Ontario, suggesting that the story was probably more about a historic winter storm than a downshift in demand, said Shaun Cathcart, CREAs Senior Economist. Notwithstanding the chilly start to the year, we continue to expect 2026 will ultimately be defined by pent-up demand from first-time buyers finally seeing a chance to enter the market. January Highlights: National home sales declined 5.8% month-over-month. Actual (not seasonally adjusted) monthly activity came in 16.2% below January 2025. The number of newly listed properties jumped 7.3% on a month-over-month basis. The MLS Home Price Index (HPI) fell 0.9% month-over-month and was down 4.9% on a year-over-year basis. The actual (not seasonally adjusted) national average sale price dipped 2.6% on a year-over-year basis in January 2026. Similar to what happened in January 2025, new supply jumped on a month-over-month basis in January 2026, rising 7.3% as sellers seemed eager to get the year started. The burst of new supply was driven by about two-thirds of local markets, and led by Montreal, Quebec City, Calgary, Greater Vancouver, and Victoria. Meanwhile, Central and Southwestern Ontario were far less prominent and, in many cases, recorded declines. This reinforces the view that winter weather was a primary factor in January in those regions, as it appears to have suppressed both demand and supply. https://www.crea.ca/media-hub/news/home-sales-in-canada-end-2025-quietly-2/

Canadas economy is expected to grow slowly in 2026, as the following factors weigh on demand: geopolitical and trade uncertainty, significantly lower population growth, soft labour markets and modest income growth. Growth is projected to improve slowly in 2027 and 2028. Housing demand is projected to gain momentum while sales stay below historical averages and prices show only modest gains after falling in 2025. New home construction is set to decline through 2028 as developers face high costs, weaker demand and more unsold homes. Condominium starts will be especially weak. Rental projects will continue to drive new supply but will moderate over the forecast period. Rental markets are moving toward balance from an overall national perspective as new supply eases pressure and rent growth slows, giving renters more flexibility before buying a home. Regional housing markets vary significantly. Construction and home sales in Ontario and British Columbia will be weaker than their 10-year averages while, in the Prairies and Quebec, they will remain above their historical averages. Ontario is the only region expected to see price declines in 2026. https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook

Mortgages remain a hot topic in corporate boardrooms, around policy tables and even during family dinners. Canada is standing right in the middle of the major mortgage renewal waveone that experts have long warned about. In the midst of this mortgage renewal wave, are Canadian homeowners able to keep up with their mortgage payments at higher rates during a time of economic uncertainty and rising unemployment? The national mortgage arrears ratethe share of mortgage consumers who have missed payments for 90 days or morehas been increasing. However, this trend is nuanced, and its interpretation has led to some confusion. The fact is that Canadian homeowners are facing 2 distinct financial realities. On one side, are emerging risks, while on the other, mortgage arrears remain low. On one hand, there are clear signs of household financial strain in regions like Toronto and Vancouver, where arrears are projected to continue increasing steadily. Additionally, certain groups of borrowers across the country are showing greater vulnerability than others. For these groupsespecially the pandemic-era first-time homebuyersthe financial pressure is much more evident. On the other hand, Canadian homeowners have proven to be remarkably resilient given the challenges theyve had to navigate. While the increase in mortgage arrears has been significant (+7 bps between 2023 Q3 and 2025 Q3), arrears remain historically low. https://www.cmhc-schl.gc.ca/observer/2026/mortgage-renewal-wave-strains-some-regions-borrowers

US tariffs and the unpredictability of future trade arrangements are disrupting the Canadian economy. Growth in Canada is expected to remain modest, while inflation stays close to 2%. The Canadian economic outlook is little changed since the October Report. Canada continues to adjust to a new trade landscape. Affected businesses are reconfiguring their trade and seeking new suppliers and markets. As this adjustment proceeds, capital will start being reallocated and some workers will shift into new roles. This adjustment will take time, and growth will be restrained through the transition. Uncertainty remains high. The world is becoming more fragmented, and geopolitical risks are elevated. For Canada, the future of trade in North America is an important uncertainty. https://www.bankofcanada.ca/publications/mpr/mpr-2026-01-28/overview/

Summary Home transactions totalled 470.3K in 2025, a 1.9% decline compared to 2024 but a stronger year than 2023. On a monthly basis, transactions were down 2.7% from November to December, a third decline in four months that is difficult to explain given recent interest rate cuts and improvements in the labour market. New listings declined by 2.0% from November to December, a fourth consecutive decline. Active listings edged down 0.5% from November to December, the fifth decline in six months. Market conditions loosened slightly during the month but continued to indicate a balanced market compared to the historical average. Still, the balanced market conditions at the national level largely reflect soft conditions in Ontario and B.C., while markets in all other provinces continue to favour sellers. Housing starts ended 2025 on a strong note, rising for the second consecutive month to reach 282.4K, their highest level in five months and well above consensus expectations. In 2025, there was a total of 259.0K housing starts nationwide, an increase of 5.6% compared to 2024. This makes it the third-strongest year on record for the new construction market after 2021 and 2022. The TeranetNational Bank Composite National House Price Index remained stable from November to December after seasonal adjustment. Six of the eleven CMAs included in the index recorded increases: Ottawa-Gatineau (+2.9%), Edmonton (+1.2%), Winnipeg (+1.1%), Calgary (+0.7%), Vancouver (+0.2%) and Quebec City (+0.1%). Conversely, prices declined in Hamilton (-1.8%), Halifax (- 1.0%), Victoria (-0.8%), Toronto (-0.5%) and Montreal (-0.2%). From December 2024 to December 2025, the composite index declined by 3.5%. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf