Housing Market Regains Momentum, Providing a Strong Handoff into Summer

General Kim Franz 17 Jun

Canada’s housing market gained meaningful momentum in May, with sales posting their strongest monthly increase of the year and leading indicators pointing to further improvement in June. After months of uncertainty, the market appears to be transitioning from stabilization to recovery as lower borrowing costs, easing energy prices, and improved affordability begin to draw buyers back into the market.

As CREA Senior Economist Shaun Cathcart noted, while May marked the first significant increase in headline sales activity in 2026, underlying market conditions have been improving for several months. Buyers and sellers are increasingly finding common ground on pricing, reflected in firmer sale-to-list price ratios, shorter selling times, and a marked slowdown in price declines. These developments suggest that the period of market adjustment is largely behind us and that home prices are beginning to find a floor.

The next phase of the housing cycle may now be taking shape. Pent-up demand, accumulated over the past two years, is starting to intersect with improved affordability and lower home prices, particularly in Ontario and British Columbia, where price corrections have been most pronounced. As confidence gradually returns, this combination could generate a sustained increase in sales activity through the second half of the year.

The single-family home market, where end-user demand remains strong, is leading the market. The condominium sector, particularly smaller investor-oriented units in major urban centres, continues to face headwinds from higher carrying costs, softer rental markets, and diminished investor participation. Even so, as financing conditions improve and excess inventory is absorbed, activity in the condo market should gradually strengthen.

Taken together, stabilizing prices, balanced market conditions, and rising sales suggest that Canada’s housing market is entering a healthier and more sustainable phase. While regional and segment-specific challenges remain, the broader national trend shows the market regaining its footing and building momentum through the summer.
New Listings

New listings declined by 1.0% in May and were down 7.9% from a year earlier, helping keep the national housing market in balance despite still-modest sales activity. Overall, Canada’s housing market can best be described as stable, although conditions vary considerably by region and property type.

Notable pockets of weakness remain in the Greater Toronto Area, Southwestern Ontario, and parts of British Columbia, particularly in the condominium segment. Smaller investor-oriented condos continue to face the greatest challenges. Much of the exceptional demand for these properties during the pandemic years was driven by investors, but that source of demand has weakened considerably. Higher carrying costs, softer rental markets, and slower population growth following significant reductions in immigration targets have all reduced the attractiveness of investment properties.

At the end of May, there were just over 200,000 properties listed for sale across Canadian MLS® Systems on a non-seasonally adjusted basis. That was essentially unchanged from a year earlier and 2.8% below the long-term average for this time of year, suggesting that supply remains relatively well contained at the national level.

The months-of-inventory measure fell to 4.8 months in May from 5.1 months in each of the previous three months. This is very close to the long-term average of five months and is consistent with a balanced national market. Historically, inventory levels below 3.6 months have signalled seller’s market conditions, while readings above 6.4 months have been associated with buyer’s markets.

Taken together, declining new listings, stable inventory, and moderating price declines suggest that Canada’s housing market is gradually finding equilibrium. While certain regions and market segments continue to face adjustment pressures, national conditions have become considerably more balanced than they were earlier in the cycle.
Home Prices

The Canadian housing market continues to show signs of stabilization. In May, the National Composite MLS® Home Price Index (HPI) edged down just 0.1% from April, marking the smallest monthly decline since October 2025. This modest movement is consistent with improving market fundamentals, including firmer sale-to-list price ratios and shorter average days on the market. Stabilizing prices represent an important turning point and could help restore buyer confidence after an extended period of uncertainty.

On a year-over-year basis, the non-seasonally adjusted National Composite MLS® HPI was down 4.2% from May 2025. While still negative, this was the smallest annual decline recorded so far in 2026, suggesting that downward price pressures are gradually easing.

Supply conditions also remain balanced. At the end of May, just over 200,000 properties were listed for sale across Canadian MLS® Systems, virtually unchanged from a year earlier and 2.8% below the long-term average for this time of year.

Taken together, moderating price declines, stable listings, and inventory levels near historical norms suggest that housing market conditions are becoming less challenging for both buyers and sellers. As confidence improves and borrowing costs continue to ease, sales activity could strengthen further in the second half of the year.
Bottom Line

Potential homebuyers faced a challenging backdrop in May as oil prices and interest rates moved higher. Conditions appear more favourable heading into June. News that the Strait of Hormuz is expected to reopen, combined with falling oil prices and easing bond yields, should provide support for housing activity. If a broader agreement between the United States and Iran is reached in the coming weeks, oil prices could decline further, reducing inflation concerns and removing an important headwind for home sales.

The Bank of Canada’s next policy decision is scheduled for July 15. Before then, policymakers will receive several key economic reports, including the May Consumer Price Index (CPI) data and the May Labour Force Survey. Assuming geopolitical tensions continue to ease and energy markets stabilize, the Bank is likely to continue looking through temporary price pressures rather than responding to short-term fluctuations in inflation.

Inflation remains the key risk. Recent U.S. inflation data came in stronger than expected, raising concerns that price pressures could prove more persistent than anticipated. If upcoming Canadian CPI data were to show a similar acceleration, the Bank of Canada would have to consider whether current policy settings remain sufficiently restrictive. While weakness in the labour market and soft housing activity argue against additional tightening, it might be considered, but is likely to be dismissed.

Globally, central banks remain divided. Japan, Norway, and Australia have recently raised interest rates, while the Federal Reserve, the European Central Bank, the Bank of England, and the Bank of Canada all cut rates during 2025 and have remained on hold so far this year.

The minutes from the Bank of Canada’s April 29 meeting underscore the Governing Council’s concern about inflation. Policymakers seriously debated the possibility of a rate hike before ultimately deciding to leave rates unchanged. The close nature of that decision highlights the Bank’s continued vigilance and suggests that inflation developments will remain one primary driver of monetary policy in the months ahead. The other driver is economic weakness, which will likely keep the central bank on hold for the remainder of this year.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Bank of Canada Holds Policy Rate Steady

General Kim Franz 11 Jun

Today, the Bank of Canada once again held the policy rate at 2.25%. This is the bottom of the Bank’s estimate of the neutral overnight rate, where monetary policy is neither expansionary nor contractionary. With inflation hovering at 2.8% and core inflation falling to 2.0% (as of April data), the Governing Council sees the current overnight rate as appropriate, as the Bank continues to look through the inflationary impact of the war in Iran. The war is in its fourth month, and oil prices and interest rates have risen considerably as a result. The war is disrupting supply chains, weakening economic activity and pushing up inflation. At the same time, the US administration continues to propose new tariffs, and the future of CUSMA remains uncertain.

CUSMA negotiations are underway, but they are unlikely to go on beyond the July 1 mandatory date for the formal review of the pact required by the treaty. On that date, the U.S., Canada, and Mexico are each supposed to declare whether they want to renew the deal for another 16 years (out to 2036), renegotiate it, or decline to renew. The three countries are set to miss the July 1 renewal milestone, with negotiations expected to stretch on for months or potentially years. Missing the date does not kill the deal. If the three don’t agree to a full 16-year extension, the agreement stays in force and shifts into a mechanism of rolling annual reviews that can continue for up to a decade. The treaty doesn’t formally expire until July 1, 2036, unless a party withdraws entirely. US Trade Representative Jamieson Greer said that on July 1, “I don’t think we’re going to renew it outright, but we’ll engage in the separate negotiations” — explicitly signalling the date is a starting point, not a hard conclusion. Dominic LeBlanc, the minister responsible for US trade, met with Greer in Washington and afterward suggested that July 1 “shouldn’t be seen as a crucial date.” Mexican and US officials say the scope and complexity of the issues — auto rules of origin, the 50% Section 232 steel/aluminum tariffs, and other disputes — make resolution by July 1 unlikely.

While first-quarter GDP growth in Canada showed a small contraction, economic growth has been solid in the US, boosted by consumption and AI-related investment. In the euro area, growth is subdued, with higher energy prices weighing on activity. China’s economic growth continues to be supported by strong exports, while oil imports have slowed substantially. Oil demand destruction is evident as China has chosen to limit energy use and draw down inventories.

Financial conditions in Canada have eased since the April Monetary Policy Report (MPR). Global equity markets have been buoyant, and bond yields, though volatile, have generally trended higher. The Canadian dollar has weakened against the US dollar and other currencies.

Canada’s economy contracted in the final quarter of last year. It weakened a bit further in Q1, but incoming data suggest that the first-quarter figure was weighed down by the 10% surge in imports, which has already reversed in the newly released April merchandise trade data. The flash estimate for April GDP is a more solid 0.4% quarter-over-quarter level (or 1.6% at an annual rate). The central bank expects growth to rebound in Q2, but even so, the economy is expected to remain in excess supply.
As expected, Canadian CPI inflation rose to 2.8% in April. Measures of core inflation declined to about 2%, and the share of CPI components growing above 3% is close to its historical average. Food price inflation moderated but remains high, and shelter inflation continued to slow. With global oil prices still elevated—roughly $10 per barrel above our April MPR assumptions—total inflation is expected to hover around 3% in the near term before gradually easing towards 2%.

In other news, the US CPI inflation report for May was released this morning:

  • US inflation accelerated again in May as the war in Iran pushed up energy prices, outpacing wages for a second straight month. The US consumer price index climbed 4.2% from a year earlier, the most since early 2023.
  • Core CPI, which excludes food and energy, increased 0.2% from April, a touch below expectations and taking some of the sting out of the Fed debate.
  • The energy index rose 3.9% in May, accounting for over 60% of the monthly all-items increase.
  • But other categories saw slower gains or outright declines: Grocery prices rose 0.1%, while transportation services, health insurance and new vehicle prices fell.
  • The breadth of price increases also declined, providing another sign that inflation has likely peaked.
  • The S&P 500 opened lower while Treasuries and the dollar wavered on the news.

Overall, today’s US CPI report sent a clear signal that consumers are pulling back on nonessential spending, pushing back against businesses’ attempts to raise prices. This should ease fears of Fed rate hikes following the blowout May payrolls report. Bloomberg News suggests that they still expect the Fed to hold rates steady at the June 12 meeting and to cut the overnight fed funds rate by 25 basis points in the fourth quarter of this year.

Bottom Line

The Bank of Canada has shown its willingness to bolster the Canadian economy amid unprecedented trade uncertainty and a record oil price shock. Ottawa, too, has taken actions to reduce the burden of higher prices on Canadians by temporarily eliminating the excise tax on oil. PM Carney is also working to diversify Canada’s trade away from the US, a strategy that has thus far been remarkably successful. As the charts below show, Canadian export diversification is gaining momentum. In addition, goods imports are also shifting away from the US to the rest of the world.

We continue to maintain the view that the Bank of Canada will keep rates steady this year. If inflation broadens and accelerates, rate hikes are possible, but that is not our baseline forecast. The Bank of Canada will be reluctant to tighten into housing market weakness. While housing activity strengthened in May, momentum is muted, and affordability improvements are likely to taper off in the coming months as trade tensions and the war keep oil prices and interest rates elevated.

 

Written by Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

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

General Kim Franz 5 Jun

Canadian employment surged 87,800 in May, the strongest reading since 2024. Today’s Labour Market Survey dispels recession concerns, but leaves the Bank of Canada open to a possible rate hike later this year or next if inflation remains troubling. The Canadian economy continues to show resilience in the face of tariffs and oil price increases.

The headline job gain, combined with a 3,800 rise in the size of the labour force, drove the unemployment rate down three basis points to 6.6%. The jobless rate is still in the 6.5%- 7.0% range seen over the past year. The employment rate rose 0.2 percentage points to 60.7%.

The report’s details were also stronger than expected. The unemployment rate for youth declined 0.9 percentage points to 13.4%. The rate also fell among core-aged women (-0.4 percentage points to 5.5%) and core-aged men (-0.4 percentage points to 5.7%).

Employment increased in several industries, most notably in construction (+27,000; +1.7%), information, culture and recreation (+19,000; +2.3%), transportation and warehousing (+19,000; +1.7%) and accommodation and food services (+17,000; +1.5%). On the other hand, employment decreased in wholesale and retail trade (-35,000; -1.2%).

Hiring also rose in manufacturing in May (+15,000; +0.8%). Hiring in this industry was little changed compared with 12 months earlier, but down 44,000 (-2.3%) from January 2025. The manufacturing sector has faced heightened economic uncertainty since early 2025, driven by U.S. tariff policies.

Employment rose in Ontario (+42,000; +0.5%), British Columbia (+25,000; +0.9%), Alberta (+14,000; +0.5%), and Prince Edward Island (+1,200; +1.3%), while it fell in Saskatchewan (-6,100; -1.0%).

Average hourly wages among employees increased 3.0% (+$1.10 to $37.24) on a year-over-year basis in May, following growth of 4.5% in April (not seasonally adjusted).
Hiring gains in May were the first significant job growth since November 2025. The increase in May follows a net decline of 112,000 (-0.5%) over the first four months of 2026. On a year-over-year basis, employment was up by 147,000 (+0.7%) in May.

The number of people working full-time rose by 154,000 (+0.9%) in May. The increase in the month offsets a downward trend observed from January to April, in which the number of full-time workers fell by 156,000 (-0.9%). In May, part-time employment decreased by 66,000 (-1.7%).

Employment rose among employees in both the private sector (+56,000; +0.4%) and the public sector (+20,000; +0.4%) in May. The number of self-employed workers was little changed.
Since the spring of 2024, the unemployment rate has remained above its average (6.0%) observed from 2017 to 2019, prior to the COVID-19 pandemic. The unemployment rate reached a recent peak of 7.1% in August and September 2025.

As employment picked up in May, the job-finding rate ticked up, with just over one-quarter (26.3%) of people who were unemployed in April found work in May. This was up 3.7 percentage points compared with the same period last year but remained below the pre-pandemic average for the corresponding months from 2017 to 2019 (31.5%). At the same time, the layoff rate remained relatively stable at 0.6%, little changed compared with a year earlier and in line with the pre-pandemic average (not seasonally adjusted).

The unemployment rate in the Toronto census metropolitan area fell 1.1 percentage points to 6.8% in May, the lowest level since November 2023. The rate in May 2026 was down from a recent peak of 9.0% in May 2025 and July 2025. Recent declines in Toronto have brought its unemployment rate closer to the rate observed in Montréal (6.5%) and Vancouver (6.4%) in May 2026.

The jobless rate also fell in Montréal (-1.2 percentage points) in May, largely offsetting the increase recorded in the previous month. In Vancouver, the unemployment rate decreased 0.6 percentage points to 6.4%. In both Montréal and Vancouver, the unemployment rate in May was virtually unchanged year over year.

In separate news, US hiring also surged in May, boosting bets on a Fed rate hike. Stocks and bonds in Canada and the US sold off on the news. US job growth topped all forecasts in May, and the unemployment rate held steady at 4.3%, offering the clearest sign yet that the labour market may be breaking out of a prolonged period of lacklustre hiring.

Nonfarm payrolls increased 172,000 last month, and hiring in March and April was stronger than previously reported, according to Bureau of Labour Statistics data out Friday. Taken together, the figures marked the strongest three-month advance in more than two years.

Bottom Line

These blockbuster 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.

The relative weakness of the Canadian labour market will discourage the Bank of Canada from tightening monetary policy too soon. To be sure, inflation remains a risk as higher energy costs become embedded in the price of a wide array of goods and services. The Bank will be reluctant to respond with rate hikes over the next few announcement dates.

Trade negotiations are accelerating as the future of CUSMA is determined. It is hard to imagine the Bank of Canada tightening in the face of such a weak housing market. Early evidence suggests housing activity picked up in May, but the sector remains vulnerable to rising interest rates. Although both the Fed and the BoC have remained on the sidelines so far this year, market-driven interest rates have risen considerably owing to the sharp rise in inflation pressures. Housing is a much larger component of economic activity in Canada than in the US. The Bank of Canada, therefore, will be particularly leery of tightening monetary policy. We hold to the view that central bank rate hikes in Canada and the US are unlikely this year.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Canada’s Economy Edges Into A Technical Recession For the First Time Since 2020

General Kim Franz 29 May

Statistics Canada reported this morning that the Canadian economy contracted slightly, by 0.1%, at a seasonally adjusted annual rate in the first quarter (Q1) of 2026. That follows a 1% contraction in the fourth quarter, a downward revision from the previously reported 0.6% decrease.

Higher imports of goods, particularly gold, were offset by accumulations of business inventories. Decreased business and government capital investment was offset by higher household spending, as final domestic demand edged down 0.1%.

On a per capita basis, real GDP increased 0.2% in the first quarter of 2026, as the population declined for a second consecutive quarter and GDP remained unchanged.

The surprise decline in the first quarter stands in contrast with forecasters’ expectations. Economists surveyed by Bloomberg were anticipating a 1.5% annualized increase in the first quarter, aligning with the Bank of Canada’s projection.

The last time Canada recorded two consecutive quarters of negative growth was in 2020 during the COVID-19 pandemic. Before that, it was in 2015 amid low oil prices.
The loonie fell to a session low after the report, trading at C$1.3822 per US dollar as of 8:58 a.m. in Ottawa. Canadian government bond yields dipped to a daily low, extending outperformance versus Treasuries, with the two-year benchmark falling 5 basis points to 2.792%.

The weaker-than-expected GDP data coincides with a looser job market, painting a softer picture of the Canadian economy as US tariffs continue to squeeze some businesses.
Bottom Line

The weaker-than-expected economic activity comes amid sustained political pressure on affordability, driven by a spike in oil prices stemming from the closure of the Strait of Hormuz following the war in Iran. With April inflation data for Canada coming in softer than expected, the Bank is likely on hold for the time being.

A flash estimate for industry-based data in April suggests the economy bounced back with 0.4% growth, driven by increases in mining, quarrying, and oil and gas extraction, as well as in manufacturing, transportation, and warehousing. That followed a 0.1% decline in March.

In direct contrast to the US, Canadian business capital investment in the first quarter posted a fifth consecutive decline, shrinking 3% on an annualized basis, driven by lower spending on engineering structures. In the US, business capital spending is booming, driven by AI-related data centre expenditures.

Business investment in residential structures fell 2.0% in Q1 of this year, following a 2.4% decline in the fourth quarter of 2025. The first-quarter decline was led by continued weakness in resale housing activity (termed “ownership transfer costs”), which fell 9.9% in the first quarter of 2026, following a 3.4% decline in 2025 overall. In the first quarter of 2026, new residential construction edged down 0.1%, led by decreased absorptions (the indicator for sales) of completed units, while work put in place for row homes and apartments increased.

Government capital investment also shrank 9.6% annualized after a sharp increase in weapons-system spending in the fourth quarter. StatCan noted that despite this decrease, the $8.3 billion outlay on weapons systems in the first quarter was still well above the average quarterly spending recorded since 1981.

Household spending increased 1.5% annualized in the first quarter, led by higher spending on financial services. However, the report noted Canadians pulled back on travel and vehicle purchases.

The household saving rate slowed to 3.5%, its lowest level since the first quarter of 2024, as spending rose faster than income.

Meanwhile, corporate income rose for a third consecutive quarter, up 1.6% on a quarterly basis, helping to explain the continued appreciation in stock markets.

Imports surged 12% on an annualized basis, reflecting gold shipments that were offset by accumulations of business inventories.

Exports fell 0.5%, led by a decline in passenger cars and light trucks, which US tariffs have battered. Meanwhile, higher shipments of crude oil and crude bitumen, as well as natural gas, offset much of that decline.

Finally domestic demand fell 0.4%, following a 2.7% increase in the previous quarter.

All in, I expect the Bank of Canada to remain on hold at the June 10th announcement meeting. Next Friday, we will see the May employment report, which is likely to remain tepid, prompting the Governing Council to hold the overnight rate steady at 2.25% for the fourth consecutive time, choosing to look through the short-term impact of higher oil prices on inflation while monitoring softer economic conditions.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Housing Activity Strengthened in April As The Month Progressed

General Kim Franz 14 May

The number of home sales recorded on Canadian MLS® Systems was up 0.7% month over month in April 2026. According to Shaun Cathcart, Senior Economist with the Canadian Real Estate Association (CREA), “While home sales were up only modestly from March to April, the small increase reflected a slow start to the month with a stronger handoff into May, alongside falling days on the market and stabilizing prices. This latest bout of global economic uncertainty and higher mortgage rates suggests the previously expected rebound in housing markets this year will remain muted. Still, it does not mean there will be no upward momentum at all.” Indeed, housing activity appears to be improving despite the war in Iran.
New Listings

New listings jumped 4.1% month-over-month in April, marking the traditional starting point for the spring market.

With the gain in new supply outpacing sales within the month of April, the national sales-to-new listings ratio eased to 45.6% compared to 47.1% in March. That said, this could reflect a timing issue between when properties are listed and when they eventually sell. The long-term average for the national sales-to-new listings ratio is 54.8%, with readings generally between 45% and 65% that are consistent with balanced housing market conditions.

There were 187,647 properties listed for sale on all Canadian MLS® Systems at the end of April 2026, up 2.2% from a year earlier but 6.1% below the long-term average for that time of the year.

There were 5.2 months of inventory nationwide at the end of April 2026, up slightly from February and March, driven by the influx of new spring listings. This remains very close to the long-term average for the five-month measure. 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.
Home Prices

In April, the National Composite MLS® Home Price Index (HPI) experienced a slight decrease of just 0.1% on a month-over-month basis, marking the smallest decline since October 2025. This trend corresponds with tightening sale-to-list price ratios and a reduction in days on the market in recent months. Price stabilization is a crucial milestone that could encourage buyers to re-enter the market in greater numbers.

On a year-over-year basis, the non-seasonally adjusted National Composite MLS® HPI dropped by 4.2% compared to April 2025, which is the smallest decline recorded in 2026 so far.
Bottom Line

With geopolitical tensions mounting and the tenuous ceasefire in Iran, some potential homebuyers have postponed their purchase decisions. While there remains considerable pent-up demand, and home prices in many regions have fallen sharply, especially in Ontario, which was hardest hit by the tariffs last year, along with the ongoing condo supply glut. These issues are unlikely to be resolved in the near term, so housing market weakness will remain a drag on overall economic activity.

Compounding these concerns is the surge in oil prices. Gasoline prices–a very visible component of consumer spending–have skyrocketed, causing supply disruptions in nitrogen fertilizer, plastics, aluminum and helium. Price pressures will no doubt mount, leading central banks to be concerned about potential stagflation.

Next Monday, we will see the CPI data for March. At this point, the Bank of Canada is likely to continue to “look through” the price pressures, hoping the war will end very soon.

Following the worse-than-expected US inflation data, the Canadian CPI for April will be released on May 29. If it confirms the 3.8% y/y US inflation, the Bank of Canada will seriously consider a 25 bps rate hike despite weakness in the labour market. The Bank is mindful of the negative impact of higher rates on already weak housing activity; this reduces the chances of a rate hike, but it cannot be ruled out. Among major advanced economies, central banks have already hiked interest rates in Japan, Norway and Australia. In contrast, the Fed, ECB, Bank of England, and Bank of Canada all cut rates in 2025 and have been on hold so far this year.

Judging from the recently released minutes of the last BoC meeting, the Governing Council seriously considered a rate hike at their April 29th  meeting. It was a close call then, a harbinger of the central bank’s inflation concerns.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Weak Jobs Report in April drives Unemployment Rate Up to 6.9%

General Kim Franz 8 May

Employment in Canada edged down by 17,700 in April, following a 14,000 gain in the prior month, missing the consensus forecast for a 15,000 increase. On a year-over-year basis, employment in April was up by 67,000 (+0.3%), but recorded a net decline of 112,000 (-0.5%) over the first four months of 2026.

The result marked a second straight month of limited movement after February’s sharp 84,000-job decline. Full-time employment fell by 47,000, while part-time positions increased by 29,000. Employment levels were broadly unchanged across the private and public sectors and among self-employed workers.

Employment varied little across major age groups in April. The unemployment rate rose among youth aged 15 to 24 to 14.3% and among core-aged men to 6.1%. Regionally, employment declined in Quebec, Newfoundland and Labrador, Saskatchewan, and New Brunswick, while Ontario added 42,000 jobs. Meanwhile, the employment rate slipped 0.1 percentage points to 60.5%.

Average hourly wages among employees were up 4.5% (+$1.64 to $37.77) on a year-over-year basis in April, following growth of 4.7% in March (not seasonally adjusted).
In April, the unemployment rate rose 0.2 percentage points to 6.9%, as more people searched for work (+51,000; +3.4%). The unemployment rate has increased 0.4 percentage points since January 2026, but remained below the recent peak of 7.1% observed in August and September of 2025. On a year-over-year basis, the unemployment rate was virtually unchanged in April 2026.

The proportion of unemployed people who had been continuously searching for work for 27 weeks or more—considered long-term unemployment—was 22.5% in April. This proportion was little changed both in the month and compared with 12 months earlier. However, it remained significantly above the pre-COVID-19 pandemic average of 17.1% observed from 2017 to 2019.

At the same time, the monthly layoff rate (0.6%) in April remained in line with the pre-pandemic average, showing no recent elevation (not seasonally adjusted).
The participation rate—the proportion of the population aged 15 and older who were employed or looking for work—rose by 0.1 percentage points to 65.0% in April as more people were in the labour force searching for work. The increase was concentrated among core-aged people, whose labour force participation rate rose 0.3 percentage points to 88.5%.

On a year-over-year basis, the overall labour force participation rate was down 0.3 percentage points in April. This largely reflected population aging, which has put downward pressure on the labour supply as more individuals have entered retirement. Among core-aged people, the labour force participation rate was up 0.3 percentage points year over year, while for youth aged 15 to 24, it was little changed.

On a month-over-month basis, employment decreases in April were concentrated in information, culture and recreation (-25,000; -2.8%), construction (-16,000; -1.0%), and in ‘other services’ (-13,000; -1.6%), an industry which includes repair and maintenance as well as personal services.

Employment change by industry, April 2026
On the other hand, employment increased in business, building and other support services (+22,000; +3.2%), health care and social assistance (+18,000; +0.6%) and in accommodation and food services (+13,000; +1.1%).

On a year-over-year basis, employment was little changed across most industries in April, with the notable exception of health care and social assistance, which was up 119,000 (+4.1%) over the period.

The cumulative decline in employment since January comes as US tariffs continue to loom over businesses and the war in Iran heightens global uncertainty, two forces expected to shape the Canadian economy this year. With the 50% rise in oil prices, demand destruction is already well underway.

Another important fundamental in the labour market is the rapid development of AI, which is already causing enormous layoffs, especially in the U.S. See the chart below.
Bottom Line

In other news, the US employment report was also released this morning, showing the strongest two-month gain since 2024.

US employers added more jobs than expected for a second month, and the unemployment rate held steady in April, indicating the labour market is holding up despite rising energy costs sparked by the war in Iran.

Nonfarm payrolls rose 115,000 last month after an even bigger surge in March, marking the strongest two-month increase since 2024, according to Bureau of Labour Statistics data out Friday. The unemployment rate was unchanged at 4.3%. The report showcases a labour market that may be gaining momentum after near-zero job growth last year. It showed hiring advanced across a variety of sectors, and follows other data indicating layoff activity remains low.

The relative weakness of the Canadian labour market will discourage the Bank of Canada from tightening monetary policy too soon. To be sure, inflation remains a risk as higher energy costs become embedded in the price of a wide array of goods and services. The Bank will be reluctant to respond with rate hikes over the next few announcement dates.

Trade negotiations will accelerate in the coming months as the future of CUSMA is determined. It is hard to imagine the Bank of Canada tightening in the face of such a weak housing market.
Written by,

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

How to prepare amid the mortgage renewal wave

General Kim Franz 4 May

Houses are shown in Vancouver on Friday, August 19, 2022. THE CANADIAN PRESS/Darryl Dyck

Christopher Liew is a CFP®, CFA Charter holder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers at Blueprint Financial.

If your mortgage is up for renewal this year, you’re part of one of the largest renewal cycles Canada has ever seen. Roughly 1.15 million Canadian households are renewing in 2026, according to the CMHC’s Fall 2025 Residential Mortgage Industry Report.

According to a July 2025 Bank of Canada staff analysis, most of those borrowers will see payments rise. Five-year fixed renewers are facing average payment hikes of 15 to 20 per cent versus what they paid in December 2024.

The Bank of Canada held its policy rate at 2.25 per cent on Wednesday, citing rising energy prices and ongoing U.S. tariff pressure. If you were hoping a rate cut would bail you out at renewal, that’s not happening any time soon.

Below, I’ll walk you through the practical steps you can take to soften the blow, regardless of where rates land this year.

1. Start shopping at least 120 days before renewal

This is the single most underused tip I can give you. Most lenders will offer you a rate hold up to four months before your renewal date. That gives you a guaranteed rate, plus the freedom to keep shopping if rates fall.

Auto-renewing with your existing lender on whatever rate they send in the mail is usually a mistake. The first offer is almost never their best one. Recent Equifax Canada data shows 56 per cent of mortgage holders plan to explore switching lenders at renewal in search of a better deal.

When you switch lenders on a straight renewal, you typically no longer have to requalify under the federal stress test. The Office of the Superintendent of Financial Institutions (OSFI) changed that rule in November 2024. That’s a big deal if your income or credit picture has changed since you originally qualified.

2. Get honest about your full financial picture

Before you commit to a higher rate for five years, run the numbers on your whole household, not just the mortgage line. If your new payment is going to swallow more of your take-home pay than you can sustainably afford, a longer amortization or a different term structure might serve you better than chasing the lowest headline rate.

Cash flow is what keeps you out of trouble. I went deep on the average Canadian’s savings, debt and net worth in a recent video, which is worth a watch if you want a benchmark before you sign.

3. Match your term to your cash flow, not a guess about rates

I covered the three-versus-five-year question in a recent CTVNews.ca column, so I won’t rehash the whole framework here. The basic idea: a shorter term gives you another shot at renewal sooner, which matters if you think rates are headed lower. A five-year term gives you payment certainty, which matters if your budget is tight and you can’t absorb a surprise.

A variable rate adds another layer of flexibility, since it lets you exit if rates fall meaningfully. None of these is automatically right.

Don’t pick a term based on a guess about where rates are going. Pick it based on your cash flow tolerance and how much certainty you actually need.

4. Talk to your lender about hardship relief if you need to

If the new payment genuinely doesn’t fit, don’t wait until you’ve missed one. The Financial Consumer Agency of Canada issued mortgage relief guidelines in July 2023 that set out expectations for federally regulated lenders to proactively support at-risk borrowers. That includes waiving prepayment penalties, waiving internal fees, not charging interest on interest, and extending amortization.

You still have to push, though. Even with the FCAC guideline, banks don’t always volunteer these the way they’re supposed to. The time to have the conversation is before you fall behind, not after.

A recent CTV News segment covered a TD survey showing 67 per cent of homeowners feel uneasy about their upcoming renewal, with 56 per cent already cutting household spending to absorb higher payments. If you’re in that camp, you’re not alone, and there are levers to pull before you reach a crisis point.

5. Use renewal as a chance to clean up other debt

Renewal is one of the few moments where you can refinance, consolidate, or restructure without penalty. If you’re carrying high-interest credit card balances or a line of credit, rolling those into a refinanced mortgage can save you thousands a year.

The catch: you’re trading short-term debt for long-term debt. That only works if you actually change the spending behaviour that created the credit card balance in the first place. Otherwise you’ll be back in the same position in two years, just with a bigger mortgage.

Final thoughts

The mortgage renewal wave isn’t going away in 2026, and the macro environment isn’t going to do you any favours. The good news is that you have more tools than most Canadians realize. Shop early, look at your full financial picture, pick a term that matches your tolerance for uncertainty, and ask your lender for help if you need it. The worst thing you can do is sign whatever shows up in the mail.

Written by

Christopher Liew

Bank of Canada Holds Policy Rate Steady

General Kim Franz 29 Apr

Today, the Bank of Canada once again held the policy rate steady at 2.25%. This is the bottom of the Bank’s estimate of the neutral overnight rate, where monetary policy is neither expansionary nor contractionary. With inflation hovering at 2.4% and core inflation falling to 2.0%, the Governing Council sees the current overnight rate as appropriate, as the Bank looks through the inflationary effects of the war in Iran.

“The evolving conflict in the Middle East is causing heightened volatility, and US trade policy continues to reshape global trade patterns. Both are ongoing sources of uncertainty. The Bank’s April outlook assumes tariffs remain unchanged and the global benchmark price of oil declines to US$75 per barrel by mid 2027, still well above pre-war oil prices”. According to the BoC, if that happens, inflation should peak around 3% in April and ease back to the 2% target by early next year.

“The Iran war has led to sharply higher energy prices and transportation disruptions, diminishing growth prospects in oil-importing countries and boosting inflation worldwide. In the United States, growth is still expected to be solid over the projection horizon, boosted by AI-related investment and consumption growth. China’s economy is supported by robust exports. In the euro area, higher prices for oil and natural gas will weigh on economic activity.”

Bond yields are modestly higher since January, while equity markets, which weakened sharply at the outset of the war, have recovered. Since the start of the war, the US dollar has appreciated against most major currencies.

“The outlook for economic growth in Canada is little changed from the January Monetary Policy Report (MPR) projection. After a contraction in the fourth quarter of 2025, growth is forecast to have resumed in early 2026. Consumer and government spending are supporting economic activity, while tariffs and trade uncertainty are weighing on exports and business investment. Housing activity declined in the fourth quarter and is held back by slow population growth, economic uncertainty and ongoing affordability issues. The labour market is soft, with subdued employment growth over the past year and job losses in sectors targeted by US tariffs. The unemployment rate remains in the 6½%‑7% range, reflecting both weak hiring and fewer job seekers.”

The Bank’s April forecast projects GDP growth of 1.2% in 2026, rising to 1.6% in 2027 and 1.7% in 2028 as growth in exports and business investment resumes along a lower trajectory. With GDP growing slightly above potential, the current excess supply in the economy is gradually absorbed. While the war in Iran may alter its composition, overall GDP growth is little changed in the updated forecast: Since Canada is a large net exporter of oil, higher oil prices increase national income even as consumers are squeezed by higher gasoline prices.

The Bank’s press release goes on to say that “CPI inflation will likely rise further in April to about 3%. Based on the assumption that oil prices will ease, inflation is forecast to come down to the 2% target early next year and remain around 2% over the projection horizon.

Against this backdrop and taking into account the current projection, Governing Council decided to maintain the policy rate at 2.25%. We are closely monitoring the impact of the conflict in the Middle East and the economy’s response to US tariffs and trade policy uncertainty. Governing Council is looking through the war’s immediate impact on inflation, but will not let higher energy prices become persistent inflation. As the outlook evolves, we stand ready to respond as needed. The Bank is committed to maintaining Canadians’ confidence in price stability through this period of global upheaval.”

WTI crude oil futures jumped more than 5% to above $105 per barrel on Wednesday, amid no signs of a near-term end to the conflict with Iran or the reopening of the Strait of Hormuz. The surge comes as markets weigh the United Arab Emirates’ shock exit from OPEC alongside signs that the conflict involving Iran may persist. Reports that Donald Trump is preparing to extend a blockade on Iranian ports have heightened fears of prolonged supply disruptions, particularly through the critical Strait of Hormuz.

Negotiations remain stalled, with both sides entrenched, raising expectations that the standoff could drag on for weeks. Meanwhile, US inventory data showed sharp declines in crude and fuel stockpiles, while exports surged to record highs above 6 million barrels per day, underscoring tightening global supply. Gasoline and refined fuel prices have also spiked, amplifying inflation concerns worldwide as energy markets remain on edge.

The Canadian dollar weakened, and market-driven interest rates rose despite the Bank of Canada’s rate hold. The Fed is expected to follow suit this afternoon, maintaining its policy rate at 3.5% to 3.75%.
Bottom Line

The Bank of Canada has shown its willingness to bolster the Canadian economy amid unprecedented trade uncertainty and a record oil price shock. Ottawa, too, has taken actions to reduce the burden of higher prices on Canadians by temporarily eliminating the excise tax on oil. PM Carney is also working to diversify Canadian trade away from the US.

There will continue to be substantial frictions that limit the geographical diversification of trade sought by Ottawa. The US is Canada’s only neighbour; hence, there is a lack of alternative markets that equal the US in size and scale, and, before Trump, in shared values on free trade.

In his speech before the press conference today, Governor Tiff Macklem suggested that, “if the United States were to impose significant new trade restrictions on Canada, we may need to cut the policy rate further to support economic growth. Alternatively, if oil prices continue to increase, and particularly if they remain elevated, the risk that higher energy prices become ongoing generalized inflation increases. If this starts to happen, monetary policy will have more work to do—there may be a need for consecutive increases in the policy rate.

It is highly unlikely that the Bank of Canada would tighten monetary policy when the housing market is as depressed as it is today.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Canadian Inflation Surges to 2.4% Y/Y on Oil Price Shock  

General Kim Franz 20 Apr

The headline inflation rate in Canada surged as expected with the War in Iran and the resulting oil price shock. The inflation rate hit 2.4%, up from 1.8% in February, tying for the highest in a year but a bit below market expectations of 2.5%. The surge reflected the initial impact of the war in the Middle East on Canadian consumer prices, as disruptions to tankers from the Persian Gulf triggered energy shortages worldwide. The consumer energy inflation swung to 3.9% from the deflation rate of 9.3% in the previous month, enough to raise transportation inflation to 3.7% (vs -0.8% in February). In turn, prices accelerated for shelter (1.7% vs 1.5%) and recreation and education (2.6% vs 0.5%). Meanwhile, base effects from the reintroduction of GST/HST taxes continued to impact food inflation, which fell to 4% from the 5.4% in February. The CPI rose 0.9% from the previous month, driven by a 21.2% surge in gasoline prices. Excluding gasoline, the CPI rose at a slower year-over-year pace in March (+2.2%) than in February (+2.4%). The CPI was up 0.9% month-over-month in March. On a seasonally adjusted monthly basis, the CPI increased 0.5%.

Higher energy prices drive up inflation

Energy prices rose 3.9% on a year-over-year basis in March, after decreasing 9.3% in February. On a monthly basis, energy prices rose 13.1% in March.

Higher gasoline prices were the primary driver of the year-over-year acceleration in the CPI, as consumers paid 5.9% more for gasoline in March than in the same month the previous year. Prices rose 21.2% in a month, the largest monthly gasoline price increase on record, driven by a supply shock from the conflict in the Middle East. However, this monthly effect was muted year over year due to the comparison with prices from March 2025, which included the since-removed consumer carbon levy. The removal of the consumer carbon levy will no longer impact the 12-month movement as of April 2026, and this will be reflected in next month’s CPI release.

Moderating the acceleration in energy prices were lower prices for natural gas (-18.1%), which are largely dependent on North American supply and therefore more insulated from global price changes.

Prices for food purchased from stores rose 4.4% on a yearly basis in March, after increasing 4.1% in February.

On a year-over-year basis, prices for fresh vegetables increased 7.8% in March, the largest increase since August 2023 (+8.7%), after rising 0.5% in February. Cucumbers, peppers and celery all had notable price growth in March, due in part to tighter supplies related to adverse growing conditions in producing countries.
Core inflation measures also came in below expectations, with core inflation hitting 2.0% and the CPI trimmed-mean 2.2% from a year ago, the slowest pace in five years, amid weak housing resales and smaller rent price increases.
Bottom Line

It is very good news that the inflation backdrop softened last month, before the onslaught of the Iran war and the oil price shock. Some of the weaker base effects will be evident in the March CPI data as well, mitigating the impact of soaring energy and commodity prices on this month’s headline inflation number.

The Bank of Canada and the U.S. Federal Reserve will remain on the sidelines at the next statement date on April 29, as a relatively quick end to the Iran war would keep a lid on inflation. President Trump has asked NATO countries to send warships to the Middle East to help open the Strait of Hormuz. The sooner the war ends, the sooner the oil price shock will dissipate. Given the uncertainty, the central banks will do best to keep their powder dry this time around, particularly given that labour markets in both countries have weakened substantially.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Housing Activity Remains Weak in March

General Kim Franz 16 Apr

The number of home sales recorded over Canadian MLS® Systems was virtually unchanged (-0.1%) on a month-over-month basis in March 2026.

“Home sales activity remained at lower levels in March, as rising global economic uncertainty, along with a mid-month jump in fixed mortgage rates tied to incoming higher inflation, piled on to an already shaky economic start to the year,” said Shaun Cathcart, CREA’s Senior Economist. “2026 is still expected to see a modest amount of upward momentum in sales and a stabilization in prices as some pent-up first-time buyer demand enters the market, but the forecast for the year has had to be revised downward. The timing of higher mortgage rates, along with the perception they may be temporary, could keep would-be buyers away at the most active time of year – April, May, and June – as they wait for rates to come back down.”

Clearly, the War in Iran, along with its unprecedented oil price shock, has spooked households and businesses, weakening overall economic activity, especially housing, which is highly interest-rate sensitive. Interest rates have risen sharply since the war began in late February, and it is uncertain how long higher oil prices will last. The reopening of the Strait of Hormuz is highly tentative, and it will take weeks, if not months, to return oil prices to pre-war levels.

The war’s timing couldn’t be worse, as it damages the usually strong spring home-selling season.
New Listings

New listings edged down a slight 0.2% on a month-over-month basis in March 2026. Lower monthly sales numbers so far in 2026 could in part be due to the fact new supply is running at the lowest levels since mid-2024.

With new supply and sales both little changed in March, the national sales-to-new listings ratio remained at 47.8%. The long-term average for the national sales-to-new listings ratio is 54.8%, with readings generally between 45% and 65% that are consistent with balanced housing market conditions.

“While the interest rate situation has recently changed, what could be a challenge for a buyer looking for a fixed rate mortgage may also be seen as more choice and less competition for those choosing a variable rate,” said Garry Bhaura, CREA’s 2026-2027 Chair. “Spring tends to be a busier time of year for the housing market, even if it may not be quite as busy as we were expecting not so long ago.”

There were 167,524 properties listed for sale on all Canadian MLS® Systems at the end of March 2026, up just 1% from a year earlier and 10.6% below the long-term average for that time of the year. Overall supply has generally been declining since May of last year.

There were five months of inventory on a national basis at the end of March 2026, unchanged from January and February and right in line with the long-term average for the measure. 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.
Home Prices

The National Composite MLS® Home Price Index (HPI) edged down 0.6% on a month-over-month basis in February, not a small decline but smaller than in January.

The non-seasonally adjusted National Composite MLS® HPI was down 4.8% compared to February 2025.
Bottom Line

With geopolitical tensions mounting and the tenuous ceasefire in Iran, potential homebuyers have postponed their purchase decisions. While there remains considerable pent-up demand, and home prices in many regions have fallen sharply, especially in Ontario, which was hardest hit by the tariffs last year and the ongoing condo supply glut. These issues are unlikely to be resolved in the near term so that housing market weakness will remain a drag on overall economic activity.

Compounding these concerns is the surge in oil prices. Gasoline prices–a very visible component of consumer spending–have skyrocketed, causing supply disruptions in nitrogen fertilizer, plastics, aluminum and helium. Price pressures will no doubt mount, leading central banks to be concerned about potential stagflation. Next Monday, we will see the CPI data for March. At this point, the Bank of Canada is likely to continue to “look through” the price pressures, hoping the war will end very soon.
Written by

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
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