RBC Economics says trade tensions and higher long-term rates sidelined buyers in September
Home resales fell across most of Canada's major housing markets in September, as escalating trade tensions with the United States and rising long-term interest rates pushed buyers back to the sidelines, according to Royal Bank of Canada (RBC) Economics.
In its October housing update, RBC assistant chief economist Robert Hogue reported transaction declines at local real estate boards in Vancouver, the Fraser Valley, Calgary, Edmonton, Winnipeg, Hamilton, Kitchener-Waterloo, Toronto, Ottawa, Montreal and Quebec City.
Among the six largest markets, year-over-year resales dropped by between 4% in Calgary and 12% in Montreal.
The pullback comes just weeks after RBC characterized August's slowdown as a temporary detour rather than a derailment.
"Diverging trends across the country reflect different states of confidence, affordability, pent-up demand, demographics, job markets and market inventory. Even macroeconomic factors like interest rates and immigration policy see their impact shaped by the local context," the report said.
Toronto and Vancouver lead home price declines
Ontario and British Columbia remain the weakest links. In the Vancouver area, the composite MLS Home Price Index (HPI) – a benchmark tracking the value of a typical home – sat 5.5% below year-ago levels.
Resales, meanwhile, fell nearly 8% from August on a seasonally adjusted basis.
"Further depreciation will likely be necessary to draw in more buyers," the report said, warning that with active listings near a decade high, price weakness could last through this year and "possibly into 2027."
Toronto's brief rebound proved short-lived.
"It didn't take long for the tentative recovery to go off course in the Toronto area. The timid rally lasted just five months to August," the report said.
Resales slipped 5.2% month-over-month in September, and the condo price index fell 6.7% year-over-year, versus 4.7% for single-detached homes.
Calgary held relatively steady, with its benchmark price down 0.8% annually, while Montreal's inventory climbed 20% from a year earlier on the strongest influx of sellers in six years.
What does an uneven recovery mean for brokers?
RBC's own data showed housing affordability gains nearly stalled in the second quarter, with the bank warning that "upward pressure on long-term interest rates and likelihood of Bank of Canada hikes next year could put ownership costs on the rise again after dropping significantly since 2024."
Some brokers remain upbeat. Drew Donaldson, principal at Toronto-based Donaldson Capital, told Canadian Mortgage Professional last month he expected activity to hold up despite the bond market turbulence lifting fixed rates.
"The fall market and Q4 is typically a strong finish to the year and we're expecting even with higher rates that it'll remain busy and pick up steam," he said.
RBC also sees eventual improvement, though not a smooth one.
"Generally, we expect improving affordability and a resilient economy will progressively unlock pent-up demand and support a mild recovery in Canada. But, the road ahead is likely to be bumpy and uneven across markets," the report said.
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