Housing activity cooled in September, with sales down 2.3% from August and the benchmark price ticking lower by 0.4% to C$652,800, or $459,900. Compared with the same month last year, the benchmark price is now 3.5% lower.
The slide came as higher borrowing costs piled onto broader uncertainty that is keeping buyers on the sidelines. Credit has been tightening worldwide as bond investors, unsettled by government debt burdens, push for higher yields. Because many Canadian mortgages are priced from government bond rates, that shift has fed straight into costlier loans for would-be buyers.
Rising fuel prices tied to the war in Iran have added to inflation pressure, raising the odds the Bank of Canada hikes rates. At the same time, Canada's housing slump has intersected with the effects of its continuing trade dispute with the US, with both nations levying fresh tariffs on one another's products.
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In a release, the real estate board's senior economist, Shaun Cathcart, said, "Many of Canada's housing markets took a step back in September." "This was hardly surprising given the latest jump in fixed mortgage rates, and with the Bank of Canada now widely expected to follow with a rate hike before the end of the year." For investors, the mix of softer sales, easing prices, tighter credit and a potential central bank move frames the near term for anything tied to Canadian housing demand, from homebuilders to lenders.
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