Canada’s housing market continued to weaken in August as economic uncertainty and rising mortgage costs discouraged buyers. At the same time, a recovery in new listings expanded options for homebuyers.
According to data from the Canadian Real Estate Association (CREA), home sales declined 0.7% from July, extending a slowdown driven by higher borrowing costs and uncertainty surrounding the wider economy.
On a year-over-year basis, home sales declined 6.9% in August, excluding seasonal adjustments. The CREA Home Price Index was unchanged from July but remained 3% below its level a year earlier, indicating continued weakness in Canadian home prices.
Meanwhile, housing supply increased. New property listings rose 3.3% from July, ending a three-month period of consecutive declines.
As a result, the sales-to-new-listings ratio fell to 49.1% from 51.1% in July, remaining below its long-term average of 54.7%. The lower ratio indicates that new properties are entering the market at a faster pace than buyers are purchasing them.
The latest housing data coincide with growing uncertainty over the trajectory of Canadian interest rates. Shaun Cathcart, senior economist at CREA, noted that the key shift lies in the broader economic environment, citing the Bank of Canada’s warning about rising inflation risks and questions regarding the sustainability of recent growth.
For homeowners and prospective buyers, these concerns are already influencing mortgage rates. Cathcart noted that fixed mortgage rates have risen alongside higher bond yields.
The shift in interest‑rate expectations carries particular significance for Canada’s housing market, where borrowing costs directly affect affordability and buyer demand. Money markets are currently pricing in approximately 1.25 percentage points of additional tightening by the end of 2027, reflecting investor expectations that rates will move substantially higher over the longer term.
For the housing market, the outlook remains challenging, with sales already declining, prices below year-earlier levels and new supply continuing to increase while financing costs rise. The August data indicate that Canada’s housing market is entering a more uncertain phase, with prospective buyers facing higher borrowing costs as broader economic concerns temper demand for major purchases.
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