Key facts
- Canadian home sales decreased 0.7% in August from the previous month.
- Sales were down 6.9% year-over-year, unadjusted.
- The Canadian Real Estate Association's Home Price Index was flat month-over-month and down 3% year-over-year.
- Newly listed properties rose 3.3% month-over-month.
- The sales-to-new listings ratio fell to 49.1% in August.
Canadian home sales experienced a slight decline in August, with a 0.7% decrease from July, as economic uncertainty and rising mortgage rates impacted market activity. Data from the Canadian Real Estate Association (CREA) revealed that sales were down 6.9% on an annual basis when not seasonally adjusted. The industry group's Home Price Index remained flat month-over-month but saw a 3% year-over-year decrease. Newly listed properties saw a rebound of 3.3% month-over-month, following three consecutive monthly declines. The sales-to-new listings ratio, a measure of market balance, slipped to 49.1% from 51.1% in July, falling further below the long-term average of 54.7%.
Shaun Cathcart, CREA's senior economist, noted that the broader economic environment has shifted, with the Bank of Canada recently highlighting rising inflation risks and expressing doubts about the sustainability of recent economic growth. He added that fixed mortgage rates have already increased due to higher bond yields, while markets are pricing in a potential rate hike for variable mortgage rates this year. Global bond yields have been climbing, driven by higher energy prices stemming from the Middle East conflict, prompting central banks, including the Bank of Canada, to consider interest rate increases. Money market data indicates a roughly 60% probability that the Bank of Canada will raise its benchmark rate, currently at 2.25%, as soon as October, with markets anticipating approximately 1.25 percentage points of tightening by the end of 2027.