Canadian Home Sales Edge Upward in August

Carola Singer • October 3, 2018

The Canadian housing market showed continued signs of stabilizing last month with sales edging upward and prices easing a bit. National home sales increased 0.9% in August, the fourth consecutive monthly gain. Sales in Toronto advanced 2.2% while they rose 2.9% in Vancouver. Nevertheless, the pace of sales activity remains below levels in most other months going back to 2014 (see chart below). As well, recent monthly sales increases are diminishing, which could mean that the recent rebound, particularly in Ontario, could be running out of runway.

The housing market has been recovering from steep sales declines early this year after federal regulators imposed stricter mortgage lending rules and the central bank raised borrowing costs. Home sellers also seem to be lowering prices for homes, fueling demand.

Roughly half of all local markets posted an increase in sales from July to August, led again by the Greater Toronto Area (GTA), along with gains in Montreal and Edmonton. Sales in the major urban areas of BC declined by 3.8% year-over-year (y/y) in August. The housing market in BC has slowed considerably since the February provincial budget hiked the foreign purchase tax and suggested a speculation tax could be introduced in the fall.

New Listings

The number of newly listed homes was unchanged between July and August, as new supply gains in the Greater Vancouver Area (GVA) and Montreal offset declines in the GTA and Winnipeg.

With sales up slightly and new listings unchanged, the national sales-to-new listings ratio edged up to 56.6% in August compared to 56.2% in July. The long-term average for this measure of market balance is 53.4%.

Based on a comparison of the sales-to-new listings ratio with the long-term average, about two-thirds of all local markets were in balanced market territory in August 2018.

There were 5.2 months of inventory on a national basis at the end of August 2018, right in line with the long-term average for the measure.

Home Prices

The Aggregate Composite MLS® Home Price Index (MLS® HPI) was up 2.5% y/y in August 2018, well below the booming pace in 2016 and early 2017. Benchmark home prices fell by 0.6% from July to August, the biggest decline since August of last year. The price decline was driven by Vancouver, where prices dropped 1.4%, the most significant monthly drop in a decade. Toronto home prices fell 0.3% in August.

Condo apartment units posted the most substantial y/y price gains in August (+9.5%), followed by townhouse/row units (+4.3%). Meanwhile, one-storey and two-storey single-family home prices were little changed on a y/y basis in August (+0.4% and -0.4% respectively).

Trends continue to vary widely among the 17 housing markets tracked by the MLS® HPI. Home price gains are diminishing on a y/y basis in the Lower Mainland of British Columbia (GVA: +4.1%; Fraser Valley: +10.7%). Prices in Victoria were up 8.5% y/y in August. Elsewhere on Vancouver Island, prices climbed 13.6%.

Among the Greater Golden Horseshoe (GGH) housing markets tracked by the index, home prices were up from year-ago levels in Hamilton-Burlington (+7.2%), the Niagara Region (+6.6%), Guelph (+5.5%), the GTA (+1.4%) and Oakville-Milton (+1.2%). By contrast, home prices remained down on a y/y basis in Barrie (-2.7%).

In the Prairies, benchmark home prices remained down on a y/y basis in Calgary (-2.2%), Edmonton (-2.1%), Regina (-4.8%) and Saskatoon (-2.3%).

Meanwhile, home prices rose by 7.1% y/y in Ottawa (led by an 8.2% increase in two-storey single-family home prices), by 5.9% in Greater Montreal (driven by a 6.3% increase in two-storey single-family home prices) and by 4.8% in Greater Moncton (led by a 7.5% increase in two-storey single-family home prices). (see Table below)

Bottom Line

Housing markets continue to adjust to regulatory and government tightening as well as to higher mortgage rates. The speculative frenzy has cooled, and multiple bidding situations are no longer commonplace in Toronto and surrounding areas. The housing markets in the GGH appear to have bottomed, and supply constraints may well stem the decline in home prices in coming months. The slowdown in housing markets in the Lower Mainland of BC accelerated last month as the sector continues to reverberate from provincial actions to dampen activity, as well as the broader regulatory changes and higher interest rates.

Since the implementation of new mortgage standards, nonprice lending conditions for mortgages and home equity lines of credit have also tightened. Additional rate hikes by the Bank of Canada are coming this fall, likely in late-October if the NAFTA negotiations appear to be progressing. The economy is running at full capacity, unemployment is low, and incomes are rising. Inflation is expected to return to the Bank of Canada’s 2% target, and uncertainty regarding trade with the US remains, but the central bank will continue to cautiously raise its trend-setting interest rate through the end of next year.

This article was written by Dr. Sherry Cooper DLC’s Chief Economist.

RECENT POSTS 

Bank of Canada Rate Announcement Oct 29th, 2025

By Carola Singer • October 29, 2025
Bank of Canada lowers policy rate to 2¼%. FOR IMMEDIATE RELEASE Media Relations Ottawa, Ontario October 29, 2025 The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. With the effects of US trade actions on economic growth and inflation somewhat clearer, the Bank has returned to its usual practice of providing a projection for the global and Canadian economies in this Monetary Policy Report (MPR). Because US trade policy remains unpredictable and uncertainty is still higher than normal, this projection is subject to a wider-than-usual range of risks. While the global economy has been resilient to the historic rise in US tariffs, the impact is becoming more evident. Trade relationships are being reconfigured and ongoing trade tensions are dampening investment in many countries. In the MPR projection, the global economy slows from about 3¼% in 2025 to about 3% in 2026 and 2027. In the United States, economic activity has been strong, supported by the boom in AI investment. At the same time, employment growth has slowed and tariffs have started to push up consumer prices. Growth in the euro area is decelerating due to weaker exports and slowing domestic demand. In China, lower exports to the United States have been offset by higher exports to other countries, but business investment has weakened. Global financial conditions have eased further since July and oil prices have been fairly stable. The Canadian dollar has depreciated slightly against the US dollar. Canada’s economy contracted by 1.6% in the second quarter, reflecting a drop in exports and weak business investment amid heightened uncertainty. Meanwhile, household spending grew at a healthy pace. US trade actions and related uncertainty are having severe effects on targeted sectors including autos, steel, aluminum, and lumber. As a result, GDP growth is expected to be weak in the second half of the year. Growth will get some support from rising consumer and government spending and residential investment, and then pick up gradually as exports and business investment begin to recover. Canada’s labour market remains soft. Employment gains in September followed two months of sizeable losses. Job losses continue to build in trade-sensitive sectors and hiring has been weak across the economy. The unemployment rate remained at 7.1% in September and wage growth has slowed. Slower population growth means fewer new jobs are needed to keep the employment rate steady. The Bank projects GDP will grow by 1.2% in 2025, 1.1% in 2026 and 1.6% in 2027. On a quarterly basis, growth strengthens in 2026 after a weak second half of this year. Excess capacity in the economy is expected to persist and be taken up gradually. CPI inflation was 2.4% in September, slightly higher than the Bank had anticipated. Inflation excluding taxes was 2.9%. The Bank’s preferred measures of core inflation have been sticky around 3%. Expanding the range of indicators to include alternative measures of core inflation and the distribution of price changes among CPI components suggests underlying inflation remains around 2½%. The Bank expects inflationary pressures to ease in the months ahead and CPI inflation to remain near 2% over the projection horizon. With ongoing weakness in the economy and inflation expected to remain close to the 2% target, Governing Council decided to cut the policy rate by 25 basis points. If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. If the outlook changes, we are prepared to respond. Governing Council will be assessing incoming data carefully relative to the Bank’s forecast. The Canadian economy faces a difficult transition. The structural damage caused by the trade conflict reduces the capacity of the economy and adds costs. This limits the role that monetary policy can play to boost demand while maintaining low inflation. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. Information note The next scheduled date for announcing the overnight rate target is December 10, 2025. The Bank’s next MPR will be released on January 28, 2026. Read the October 29th, 2025 Monetary Report

Everything You Need to Know About Second Mortgages

By Carola Singer • October 22, 2025
What Is a Second Mortgage, Really? (It’s Not What Most People Think) If you’ve heard the term “second mortgage” and assumed it refers to the next mortgage you take out after your first one ends, you’re not alone. It’s a common misconception—but the reality is a bit different. A second mortgage isn’t about the order of mortgages over time. It’s actually about the number of loans secured against a single property —at the same time. So, What Exactly Is a Second Mortgage? When you first buy a home, your mortgage is registered on the property in first position . This simply means your lender has the primary legal claim to your property if you ever sell it or default. A second mortgage is another loan that’s added on top of your existing mortgage. It’s registered in second position , meaning the lender only gets paid out after the first mortgage is settled. If you sell your home, any proceeds go toward paying off the first mortgage first, then the second one, and any remaining equity is yours. It’s important to note: You still keep your original mortgage and keep making payments on it —the second mortgage is an entirely separate agreement layered on top. Why Would Anyone Take Out a Second Mortgage? There are a few good reasons homeowners choose this route: You want to tap into your home equity without refinancing your existing mortgage. Your current mortgage has great terms (like a low interest rate), and breaking it would trigger hefty penalties. You need access to funds quickly , and a second mortgage is faster and more flexible than refinancing. One common use? Debt consolidation . If you’re juggling high-interest credit card or personal loan debt, a second mortgage can help reduce your overall interest costs and improve monthly cash flow. Is a Second Mortgage Right for You? A second mortgage can be a smart solution in the right situation—but it’s not always the best move. It depends on your current mortgage terms, your equity, and your financial goals. If you’re curious about how a second mortgage could work for your situation—or if you’re considering your options to improve cash flow or access equity—let’s talk. I’d be happy to walk you through it and help you explore the right path forward. Reach out anytime—we’ll figure it out together.