Canadian Home Sales Tumble Amid Economic Uncertainty

Canadian home sales declined in August as rising economic uncertainty and higher mortgage rates weighed on the market, according to data from the Canadian Real Estate Association.

The association's Home Price Index was unchanged month-over-month but down 3% year-over-year. The number of newly listed properties rebounded 3.3% after three consecutive monthly declines.

Shaun Cathcart, CREA's senior economist, attributed the decline in sales to the broader economic environment, citing the Bank of Canada's warning of rising inflation risks and doubts about recent economic growth.

Cathcart noted that fixed mortgage rates have already increased due to higher bond yields, while variable rate hikes are also on the table for this year. Bond yields have climbed globally as higher energy prices boost inflation, leading central banks to consider interest rate hikes.

Market data shows a 60% chance of a Bank of Canada rate hike as soon as October and one-and-a-quarter percentage points of tightening by the end of 2027.