The national housing market, despite all odds, continues to defy gravity, with both sales and prices picking up after a temporary slowdown near the end of last year and into the early half of this year. I believe this is more a reflection of falling mortgage rates which have finally fed through into increased housing activity.

Per the Canadian Real Estate Association data, national home sales are now slightly above the 10 year average.

Canada national home sales
Canadian home sales are slightly above the 10 year average.

The increase in housing activity has been telegraphed through a noticeable increase in residential mortgage credit growth. This has been accelerating since April, and while the pace of growth is still very weak, residential mortgage credit is actually growing faster than it did prior to the B-20 mortgage stress test!

Canada mortgage credit growth
Residential mortgage credit growth on a 3 month annualized basis.

Of course activity levels vary by city, but the general theme is housing activity is increasing across the vast majority of Canada. Considering we are still enjoying full employment, record high immigration, and near record low borrowing costs it shouldn’t come as a surprise that housing activity remains robust. The question really should be, what happens when any of those three change? It is unlikely rates are going up meaningfully anytime soon, however you could certainly make the argument the current business cycle is long in the tooth and that the Canadian labour market is susceptible to a slowdown. If a recession ensues, migration will also pullback given it mirrors the business cycle.

Regardless, the cycle continues for now. Here is ScotiaBanks current housing activity rankings by city. You’ll notice the strength remains mostly out east.

housing activity across Canada
Housing activity across Canada as ranked by Scotia Bank.

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