Canadian home sales fall in August as economic uncertainty grows

Canadian home sales fell in August as rising economic uncertainty and increased mortgage rates weighed on activity, data from the Canadian Real Estate Association showed on Tuesday.

• Home sales fell 0.7% month-over-month in August.
• Sales were down 6.9% on an annual basis, without seasonal adjustment.
• The industry group's Home Price Index was unchanged on the month and was down 3% year-over-year.
• Newly listed properties rebounded 3.3% month-over-month after three straight monthly declines.
• The sales-to-new listings ratio slipped to 49.1% from 51.1% in July, moving further below the long-term average of 54.7%.

“What has changed is the broader economic environment, with the Bank of Canada recently warning of rising inflation risks, along with doubts about the durability of recent economic growth," Shaun Cathcart, CREA's senior economist, said in a statement.

“For borrowers, fixed mortgage rates have already increased on higher bond yields. Meanwhile, on the variable rate side, a rate hike is not only back on the table for this year but already priced in by markets,” Cathcart said.

Bond yields have climbed globally in recent months as higher energy prices due to the Middle East conflict boost inflation, leading to central banks, including the Bank of Canada, contemplating interest rate hikes.

Investors see a roughly 60% chance that the BoC will raise its benchmark rate, which currently sits at 2.25%, as soon as October and are pricing in one-and-a-quarter percentage points of tightening by the end of 2027, money market data shows. CADIRPR