Housing Market Activity Picked Up Again in July As New Listings Slowed and Prices Ticked Up For the First Time in Almost Two Years

General Kim Franz 18 Aug

According to data released this morning by the Canadian Real Estate Association (CREA), the Canadian housing market continued to improve in July. Home sales increased month-over-month (m/m) by 0.5%, marking the fourth consecutive monthly gain.

Shaun Cathcart, CREA’s Chief Economist, said, “At the national level, July’s housing data was a carbon copy of the June numbers, with home sales edging up, listings down, and prices remaining stable. The more interesting story over the last few months has been below the surface of the headline national numbers, where markets across the country are generally moving back towards balance. That’s true on the Prairies, in Quebec, and on the East Coast, where most sellers’ markets have been steadily cooling off over the past year. More recently, it’s also been true of the markets in B.C.’s Lower Mainland and Ontario’s Greater Golden Horseshoe, where formerly buyers’ or borderline buyers’ markets have largely shifted back into balanced market territory.”
New Listings

New listings declined by a further 1.6% on a month-over-month basis in July 2026, marking the third drop in a row.

Combined with the small increase in sales recorded in June, the national sales-to-new listings ratio tightened to 51.3% in July. This is converging on the long-term average for the national sales-to-new listings ratio of 54.7%. Readings roughly between 45% and 65% are generally consistent with balanced housing market conditions.

“The ongoing shift towards a more normal balance between supply and demand in so many markets across Canada is good news for buyers, whether that means not having to worry about your new home falling in value, or not feeling pressured to make a decision due to competing offers,” said Garry Bhaura, CREA Chair. “No matter where you are in Canada, more moderate housing market conditions can be expected to continue to bring buyers off the sidelines going forward.”

There were 205,388 properties listed for sale on all Canadian MLS® Systems at the end of July 2026, up just 0.6% from a year earlier and just 1.5% above the long-term average for that time of the year. Overall supply has been sliding sideways and is very close to average levels for over a year now.

There were 4.7 months of inventory nationally at the end of July 2026, the lowest level so far in 2026 and slightly below the long-term average of 5 months. Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months, and a buyer’s market would be above 6.4 months.

With the exception of Saskatchewan, New Brunswick, and Newfoundland and Labrador, which are still borderline sellers’ markets, other provinces have seen their months of inventory converge toward long-term averages in recent months. Notably, even Ontario’s months of inventory measure was only about half a standard deviation above average in July, after being in a buyers’ market for the first four months of this year.
Home Prices

The National Composite MLS® HPI edged up 0.1% from June to July, marking the first increase in the national measure since November 2024.

The non-seasonally adjusted National Composite MLS® HPI was down 3.3% compared to July 2025. Year-over-year declines have been shrinking since January, with the July 2026 reading marking the smallest decrease since October 2025.
Bottom Line

The brief opening of the Strait of Hormuz triggered a sharp decline in oil prices and market-driven interest rates. Alas, the opening was short-lived as the war resumed in spades.

Despite an ongoing trade war with the US, Canada’s largest trading partner, the country’s economy appears to be picking up. The unemployment rate fell to a two-year low last month, and the latest reading on gross domestic product suggests annualized growth rebounded to 3.4% in the second quarter, higher than the central bank’s previous estimate.

While the inflation data for July ticked up a bit, the rise in gasoline prices has not spurred a generalized rise in price pressures. We believe the Bank of Canada will remain on the sidelines once again at its September 2 meeting.

South of the border, however, US long-term Treasury yields have been boosted by the crowding-out effect of the huge corporate bond financing of the AI hyperscalers.

Monday saw the yield on the 30-year US Treasury bond top 5.3% for the first time since the eve of the Global Financial Crisis in 2007, and that’s in line with global experience; Japanese 30-year yields have risen above 4% for the first time in their 27-year history, while equivalent UK gilts yield their highest since 1998. Rising long-term yields have pushed up mortgage rates in the UK, Europe and Japan.

To be sure, some of the upward rate pressure reflects inflation expectations, but three other factors are also at play: the budget deficit outlook; AI-related corporate bond issuance; and the changing Treasury buyer base. With companies issuing huge amounts of debt to fund AI capex, long Treasuries have a new competitor that might force them to offer a stronger yield, while the growing budget deficit never goes away as an issue.

While Canada’s fiscal situation is nowhere near as dire as the American fiscal imbalance, Canada cannot fully sidestep upward pressure on market-driven rates.
 

Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Canadian CPI Inflation Edges Up to 3.0% in July, While Core Inflation Remains Below Its 2% Target

General Kim Franz 18 Aug

The Consumer Price Index (CPI) rose 3.0% y/y in July, following the June gain of 2.8%. The inflation uptick was caused by higher gasoline prices and a rise in the cost of travel tours. Slowing the faster price growth was the deceleration in grocery prices. The all-items CPI excluding gasoline rose 2.2% for the third consecutive month.

Year over year, gasoline prices grew faster in July (+25.7%) than in June (+20.5%). The conflict in the Middle East, including the blockade of the Strait of Hormuz and the partial closure of Red Sea shipping routes in late July, put upward pressure on gasoline prices.

Year over year, prices for travel tours rose faster in July (+15.2%) than in June (+6.8%). Higher prices were driven by more expensive hotels and flights, coinciding with World Cup matches.

Similarly, air transportation prices rose 12.0% year over year in July, following a 9.6% increase in June. Contributing to the price increase were higher jet fuel costs.

The average of the Bank of Canada’s preferred core measures of inflation rose by 1.95%, barely rising from the previous month and remaining below its 2% target.

Prices for food purchased from stores grew more slowly in July (+3.1%) than in June (+3.9%) on a year-over-year basis. Despite the slowdown, July was the 18th consecutive month that grocery price inflation outpaced the all-items CPI.

The year-over-year deceleration in grocery prices was driven by slower price growth for fresh vegetables (+3.9%) and fresh or frozen chicken (+0.3%) as well as lower prices for cereal products (-1.7%). Higher prices for fresh fruit in July (+6.1%) compared with June (+1.7%) moderated the slowdown.

On a monthly basis, price growth for fresh fruit recorded the highest month-over-month movement for the month of July since 2011, at 4.7%. Driving the monthly increase were higher prices for berries and melons.

Year over year, prices rose faster in all provinces in July than in June, except for Ontario.
Year over year, Ontario was unchanged at 2.0% in July compared with June (+2.0%). This was the smallest price increase among the provinces, driven by declines in homeowners’ replacement cost (-4.6%) and natural gas prices (-18.7%).

Nova Scotia had the highest rate of inflation among the provinces at 5.0% in July. Higher prices for electricity (+3.3%) and rent (+8.7%) drove the acceleration.

In New Brunswick, faster price growth was led by higher prices for electricity (+4.4%) and traveler accommodation.

The 12-month change in the Consumer Price Index (CPI) and CPI excluding gasoline
Source: all above data is provided by Statistics Canada

Bottom Line

Today’s inflation report reinforces our view that higher gasoline prices temporarily boost headline inflation while further eroding household purchasing power. However, these energy-driven increases, largely tied to geopolitical tensions, are unlikely to trigger a broader resurgence in underlying inflation. While food and shelter continue to account for a disproportionate share of price growth, inflationary pressures across the economy are generally moderating amid slowing domestic demand.

The duration of the disruption in the Strait of Hormuz remains a key risk. The longer the shipping route remains closed, the longer energy prices are likely to remain elevated. Even so, the June data support our base-case scenario that the Bank of Canada will remain on hold through the remainder of 2026. Policymakers will continue to closely monitor incoming inflation data and stand ready to tighten policy if price pressures broaden and become more persistent. Still, for now, underlying inflation trends remain consistent with a patient, wait-and-see approach.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

So Much For Recession Worries, The July Jobs Report For Canada Was A Blockbuster

General Kim Franz 10 Aug

Surprisingly strong employment gains in July confirm the economy is recovering from its Q4-’25 to Q1-’26 weakness. This is consistent with the strong July GDP figures, which point to 3.8% growth in the second quarter following a -1.0% dip in Q1.

Canadian employment defied the bears by jumping 75,100 in July, nearly evenly split between full-time and part-time work. Self-employment (+44.4k) accounted for close to half of the overall increase, while private sector jobs still rose by 57.9k. These were offset by a 27k drop in public sector jobs (a rarity, echoing the big drop seen stateside in July). Decisively, total hours worked rose 0.6% m/m in July.

Employment increased by 181,100 between May and July, marking the biggest three-month employment gain since before US President Donald Trump began imposing tariffs on Canadian goods last year.

The employment rate increased by 0.1 percentage points to 60.9% in July. The rate was up 0.2 percentage points compared with 12 months earlier.
Today’s report marked the third consecutive monthly decrease for the unemployment rate, which has fallen by 0.5 percentage points since April. The rate was also own 0.5 percentage points year-over-year in July.

A higher proportion of people searching for work have been finding jobs compared with last year, with the job-finding rate coming in at 20.8%. This was up from 18.5% for the same period a year earlier but below the pre-COVID-19 pandemic average of 26.6% recorded for the same period from 2017 to 2019 (not seasonally adjusted). Canada’s population barely grew in the past year given the tightening in immigration policy, making it easier for the jobless to find work.

Wholesale and retail trade (+21,000; +0.7%) recorded the largest employment increase across industries in July. Despite the monthly increase, employment in this industry was down by 50,000 (-1.7%) compared with 12 months earlier, largely reflecting a downward trend observed from January to May 2026.

Chart 5
Employment change by industry, July 2026
Employment also rose in July in finance, insurance, real estate, rental and leasing (+18,000; +1.2%), professional, scientific and technical services (+17,000; +0.8%) and construction (+16,000; +1.0%). Despite recording monthly gains, employment in these three industries changed little on a year-over-year basis.

Provinces had varied results, with employment increasing the most in Ontario (52,000 jobs), in British Columbia (18,000 jobs), Manitoba (5,900 jobs) and Nova Scotia (4,600 jobs). Alberta and Quebec saw little change, although Alberta has seen notable job growth and decline in unemployment since July 2025.
The unemployment rate dipped again to 6.4%, down from 6.5% in June. This represents a two-year low in joblessness, down from the recent peak of 7.1% in September. The unemployment rate has fallen by half a percentage point since the spring. The Bank of Canada will see this as further tightening in the job market.

Among the three largest census metropolitan areas, the unemployment rate rose by 0.7 percentage points to 6.6% in Montréal, offsetting a similar-sized decline in the previous month. In Vancouver, the unemployment rate fell 0.6 percentage points to 6.0% in July. The unemployment rate was little changed in Toronto at 6.7%; however, it was down from a recent high of 9.0% observed in July 2025.

In direct contrast to the Canadian jobs report, the US nonfarm payroll report was much weaker than expected. US employers unexpectedly cut jobs in July and hiring in the prior two months was revised lower, suggesting the labour market is weaker than previously thought after surprising strength earlier this year.

Nonfarm payrolls decreased 23,000 last month following a combined 103,000 downward revision to the May and June figures, Bureau of Labour Statistics data showed Friday. The unemployment rate fell to 4.1% as labour force participation continued to slide, and wage growth slowed.

According to Bloomberg news, the US labour market may be starting to falter amid rising prices and uncertainty from the Iran war, despite recent data showing strength in consumer spending and business investment. The data could also prompt the Federal Reserve to delay interest-rate increases as officials measure inflation against risks to employment.

Bottom Line

Employment increased by 181,100 between May and July in Canada, marking the biggest three-month employment gain since before US President Donald Trump began imposing tariffs on Canadian goods. These blockbuster Canadian jobs reports, accompanied by inflation risk stemming from high tariffs and the war in Iran blocking the Strait of Hormuz, are troubling for both stocks and bonds.

While the economy continues to show signs of stabilization, trade uncertainty still looms. US President Donald Trump has threatened to impose a new round of 50% tariffs on a number of Canadian goods starting Aug. 19.

Canadian officials met with US Trade Representative Jamieson Greer on Thursday as the two sides try to find a deal before Trump’s deadline.

With wage growth decelerating further and energy prices more moderate, the Bank of Canada won’t take on a more hawkish tone yet, though a strengthening economic backdrop could eventually push it in that direction if it persists.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres