Canada’s housing market appears headed for a “bleak autumn” of retreating prices and reversing momentum based on the latest Canadian Real Estate Association (CREA) data, economists say.
The market had been experiencing a nascent recovery, with a few months of rising sales under its belt. Now, one economist is calling for prices to decline, while another said much of the sales momentum from earlier in the year has been lost.
Nationally, home sales fell 0.7 per cent in August from July and prices remained flat, CREA said on Tuesday.
“While we had previously anticipated a stabilization this year, we now expect … house prices to fall a bit further in the coming months,” Ariane Curtis, North America economist at Capital Economics Ltd., said in a report Tuesday.
Capital is now calling for home prices to remain flat for 2027 instead of rising by one per cent, as it previously forecasted. Price increases are expected to kick into high gear by rising three per cent in 2028, she said.
August’s drop in sales ended a five-month streak of increases and “reversed part of the recovery seen in recent months,” Daren King, an economist at National Bank of Canada , said in a note on Tuesday. Sales now sit at the same level as in May and are 11.2 per cent below their 10-year average.
King said much of the recent sales gains and current pullback have to do with Ontario, where a 3.1 per cent drop cancelled out increases in several provinces, including Quebec and Saskatchewan.
“Although it is not uncommon for the market to take a breather after several months of gains, we do not believe that the decline in sales in August reflects a temporary blip, but rather a slowdown caused by the uncertainty that intensified during the month due to the trade dispute with the United States,” he said.
Some market watchers are blaming the rise in bond yields , which are used to set fixed mortgage rates, for stifling the housing rebound. The rate on U.S. Treasuries this week pushed past five per cent to the highest level since 2007.
King said rising yields haven’t hit the Canadian housing market yet, but people are turning to variable-rate mortgages to avoid the potential increase, while some homebuyers have a pre-approved mortgage in their back pocket and those deals are still in effect.
However, mortgage rates are expected to continue rising to catch up with bond yields, potentially driving buyers out of the market.
Clay Jarvis, a mortgage expert at NerdWallet Canada, predicted mortgage hunters will be hard pressed to find a fixed rate under 4.2 per cent by week’s end.
“That’s going to shut the door on a lot of buyers,” he said in a press release.
Those attracted by better variable-rate mortgages might end up shying away as the risks rise that the Bank of Canada’s next move will be an i nterest rate hike and any increase will immediately be applied to variable mortgages.
As a result, Jarvis is predicting a “bleak autumn” ahead for the real estate market.
“Expect demand to soften overall this fall, driven by the uncertainty faced by workers in Ontario and Quebec, where Trump’s looming tariffs on autos and steel could do significant economic damage,” he said.
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A new report tracking major energy projects in Canada found that oil and gas investment is badly lagging that of other energy sectors.
The report from the C.D. Howe Institute said that between 2017 and 2025, oil and gas projects fell by 76 per cent, while the number of electricity projects rose by 60 per cent.
“Many electricity projects are under provincial jurisdiction and not subject to the same regulatory regime, including government approval, as oilsands or offshore oil projects,” the report said.
Swinging oil prices have hurt the oil and gas industry in the past, but despite rebounding commodity prices, the number of projects in the sector sit at the lowest level in a decade.
This decline conflicts with what is happening in the rest of the world with regions such as the Middle East, Africa, and Central and South America “maintaining or increasing upstream oil and gas investments between 2020 and 2025, while North American investments declined between 2023 and 2025.”
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The route to financial independence isn’t so straight forward these days. According to a new survey from the Royal Bank of Canada, 37 per cent of parents of offspring aged 35 to 40 are providing financial assistance to their children. The survey also found that just over three in 10 parents said their children aged 18 to 40 were not yet able to stand on their own feet financially. Keep reading here to find out why.
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McLister on mortgages
Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.
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Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff and Bloomberg.
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