Canadian Home Sales Decline Amid Rising Economic Uncertainty
The Canadian Real Estate Association has reported that home sales fell in August, as rising economic uncertainty and increased mortgage rates weighed on activity. According to the data, home sales dropped by 0.7% month-over-month in August.
This decline comes after three straight monthly declines in new listings, which rebounded by 3.3% in August. The industry group's Home Price Index was unchanged from July and down 3% year-over-year. The sales-to-new listings ratio also slipped to 49.1%, moving further below the long-term average of 54.7%.
CREA senior economist Shaun Cathcart attributed the decline in home sales to the broader economic environment, which has been affected by rising inflation risks and doubts about the durability of recent economic growth. He also noted that fixed mortgage rates have increased due to higher bond yields, while variable rate mortgages are now being priced in for a potential rate hike.
The Bank of Canada's warning of rising inflation risks has led investors to anticipate a 60% chance of a benchmark rate hike by October and one-and-a-quarter percentage points of tightening by the end of 2027.