Canada housing starts jump in November

Housing starts across Canada rose by 9.4% in November as a strong pace of construction in Quebec and the Atlantic and Prairie provinces helped offset still-sluggish activity in Ontario and British Columbia.

Canada Mortgage and Housing Corporation (CMHC) said on Monday that the total monthly seasonally adjusted annual rate (SAAR) of national housing starts jumped to 254,058 units, an increase from 232,245 in October.

But the six-month trend in starts fell, while actual housing starts in centres with a population of 10,000 or more slid by 3% (to 21,870 last month, down from 22,501 in November 2024).

Still, those centres have seen a 4% increase in actual starts in the year to date, and CMHC deputy chief economist Kevin Hughes pointed to some positive signs for the national homebuilding outlook.

“Both the six-month trend and actual starts fell in November, showing signs of slowing momentum in residential construction,” he said in remarks accompanying the CMHC release. “This was driven by lower monthly starts in Ontario, BC, and Alberta.

“However, on a year-to-date basis, starts are still elevated compared to last year and remain on pace to surpass the 2024 total.”

Ontario and BC housing starts remain below the pace they set last year, but eastern and Prairie provinces as well as Quebec “have pushed national year-to-date starts higher,” Hughes said.

Seasonally adjusted single-detached housing starts were slightly lower across the country in November, falling by 1% from the previous month, while all other housing types posted a 2% decrease.

Canada’s tepid pace of home construction has been in the spotlight in recent years thanks to an acute affordability crisis across several key markets.

Prime minister Mark Carney unveiled plans this year to turbocharge the pace of homebuilding to about half a million units a year – well above the current clip.

Housing market watchers will get a better idea of how home construction fared this year when CMHC releases its December and full-year starts data for 2025 next month, on January 16.

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Here's how many rate cuts economists are now expecting in 2026

The Bank of Canada may have just poured cold water on rising bets for an interest rate hike in 2026, economists said, even as some now warn that the next move could ultimately be up, not down.

Policymakers held the benchmark rate at 2.25%, the bottom of the Bank’s neutral range, and signalled that policy is “about the right level” to guide the economy through tariff‑driven upheaval.

Markets that have priced at least one hike in 2026 quickly pared back those expectations after the decision, following a total of 100 basis points in cuts over 2025.

Still dovish – but with the door open

Capital Economics dropped its call for an early‑2026 cut, saying the statement’s emphasis on moderate growth and contained inflation expectations suggest little urgency to move.

“This all but kills our previously held view that the policy rate would eventually be lowered into accommodative territory at some point next year, given a sluggish recovery and lack of any offsetting short-term stimulus measures in the federal government’s latest budget,” Bradley Saunders, North America economist at Capital Economics, said.

“That said, we still hold a relatively dovish view.”

He pointed to the Bank’s reminder that “uncertainty remains elevated. If the outlook changes, we are prepared to respond.”

Other forecasters converged on a lengthy pause. Canadians should expect the Bank to be on hold for an “extended period,” Charles St‑Arnaud, chief economist at Servus Credit Union, said.

“The overall message from the decision is that the global and Canadian economies have been resilient in the face of the U.S. tariffs,” he said, adding that “the threshold for a cut is relatively high and would require a significant deterioration of the outlook.”

From cuts to a holding pattern

For Oxford Economics, “stronger‑than‑expected (third‑quarter gross domestic product) and recent labour market data likely solidified BoC's decision to stand pat after back‑to‑back 25‑basis‑point rate cuts,” senior economist Michael Davenport said.

He expects the Bank to hold through 2026, with the “next move likely a rate hike to 2.75%, but not until 2027.”

National Bank of Canada economists Taylor Schleich and Ethan Currie said the Bank “stopped short of validating market expectations for rate hikes as soon as the middle of next year.”

“Going forward, we see the Bank (of Canada) holding steady through at least the first half of the year,” they said, flagging a possible hike in late 2026 if unemployment continues to fall and inflation heats up.

Claire Fan, senior economist at RBC, said the Bank delivered a “well‑telegraphed, widely‑expected hold” and that “we think the BoC is done with rate cuts, and that the next change in interest rates is more likely to be a hike” following 275 basis points of easing since mid‑2024.

Derek Holt of Scotiabank likewise expected an “extended hold” before about 50 basis points of hikes starting in the second half of 2026, arguing that Taylor‑rule style estimates suggested the current rate might already be 25–50 basis points too low.

Douglas Porter, chief economist at BMO, said the Bank’s own language pointed to a year on pause. “We shifted our call to no rate changes for all of 2026 recently, and messaging from the Bank appears aligned with that view,” he said.

He added that “there is greater chance of a BoC rate cut than a hike in 2026, even if the most likely outcome is no move at all.”

TD economist Marc Ercolao said the central bank had “reinforced that it feels comfortable with the current level of interest rates,” and was “likely done with rate cuts for 2026, pending any upcoming economic turbulence.”

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Why buyer nerves, not rates, are holding Canada's housing recovery back

With the Bank of Canada holding its policy rate at 2.25%, many market watchers expect steady borrowing costs to calm the housing market heading into 2026.

Still, industry forecasts point to only modest price growth and a “reset” year rather than a sharp rebound, even as major brokerages describe conditions as improving but fragile.

Joel Fox, chief operating officer of digital real estate platform Ownright, argued that the real drag on activity has less to do with borrowing costs and more to do with psychology.

In his view, confidence, clarity and emotional risk are now doing more to shape buyer behaviour than posted mortgage rates.

Recent internal Ownright survey data of 250 Ontario homebuyers indicated that 97% felt financially ready to buy, but nearly half reported that the process became confusing or stressful once they encountered the fine print.

“A rate hold confirms what we’ve been seeing for months: interest rates aren’t the barrier anymore. Prices have already come down from their peaks, but buyers remain cautious because they’re unsure about the long-term value of their purchase. People worry more about overpaying or losing equity than they do about an extra few dollars on monthly interest,” Fox said.

“Realtors and lenders are entering a new phase where the non-financial side of homebuying matters more than the price tag. Buyers want transparency, clear communication, realistic valuations, and guidance that helps them understand the risks, not just the costs. And with AI tools giving consumers more information than ever, the industry can’t rely on old assumptions about what buyers will accept,” he said.

Fox said that emotional risk has increasingly outweighed pure affordability concerns: buyers fear locking into properties that might lose value, even as many believe that current prices are below peak levels.

He said AI-driven valuations and richer data on neighbourhood trends have trained borrowers to scrutinize comps, price cuts and days-on-market far more closely than in the last cycle. 

Meanwhile, BMO chief economist Doug Porter describes a 2026 rate hike as a “distant prospect,” while suggesting that a steady overnight rate could give buyers more certainty about future costs.

Royal LePage and REMAX Canada both project only moderate national price growth, with more balanced conditions rather than a renewed frenzy.

At the same time, some rate forecasts suggested that the Bank of Canada has moved to the lower end of its neutral range, reinforcing the sense that policymakers are now in “wait and see” territory.

Fox said the industry’s next challenge lies less in product design and more in communication. He pointed to situations where pre-approvals, conditional offers and closing costs diverge from buyers’ expectations, eroding trust even when payments remain manageable.

“Heading into 2026, trust is going to drive the recovery. Rates may be stable, but confidence isn’t, and until the industry rebuilds it, we shouldn’t expect major movement in the market,” Fox said.

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Mortgage industry, economist reaction pours in as BoC reveals latest decision

The Bank of Canada’s decision to hold its overnight rate at 2.25% leaves the mortgage industry focused less on surprise and more on what comes next for strained borrowers and a cooling housing market.

Analysts have widely expected a pause after a stronger‑than‑anticipated November jobs report and a 25‑basis‑point cut in October.

The hold reinforces the Bank’s recent pause‑and‑assess stance as inflation eased from September’s 2.4% pace to 2.2% in October.

CIBC economist Katherine Judge highlights the Bank’s resistance to reading too much into recent upside surprises.

“Policymakers played down recent upside surprises in data, pointing to only some signs of improvement in the labour market, with trade-sensitive sectors still weak and hiring intentions muted, and citing that final domestic demand was flat in Q3, with the headline reading driven by volatility in trade,” Judge wrote.

She added that such “comments that push back on recent upside surprises in the data seem to suggest that the risks ahead would be to the downside, and that resulted in bond yields easing off.” CIBC now expects the policy rate to remain on hold through 2026.

For TD Economics, the message is continuity rather than surprise.

“Dismissing the economy’s resilience would be a mistake, however, the outlook remains challenging and the risks from trade uncertainty remain high,” said Andrew Hencic, director and senior economist at TD Economics.

He noted that a sequence of strong employment reports has pushed markets to reprice the risk of future hikes, but not enough to shift the near‑term path.

“The hold here was widely expected, and we maintain the view that the balance of risks to the outlook will have the Bank on hold in the coming months,” Hencic said.

With CUSMA renewal talks set to intensify and key indicators still clouded by tariff impacts, he added that TD expects the Bank to stick to a “data dependent approach” as it weighs any further moves.

Housing market stability, not a spark

“This rate hold comes as the housing market enters what is traditionally one of the slowest times of year,” said Victor Tran, mortgage and real estate expert at Rates.ca.

“The hold provides some stability, but it’s not likely to spur a significant increase in sales activity during the holiday season. We may see some pickup early next year, if homebuyers feel confident enough to step off the sidelines. But buyer confidence depends on more than just mortgage rates. Inflation, affordability and broader economic health are all factors that potential homebuyers are likely to take into account in their purchase decisions, in addition to potential job loss and other personal life events.”

While the hold anchors variable mortgage rates, a recent 20‑basis‑point rise in bond yields has already pushed some fixed rates higher, with more lenders expected to follow. That dynamic weighs on would‑be buyers and owners facing renewal.

According to the Bank of Canada, roughly two thirds of borrowers renewing in 2026 are expected to see payments increase, with average hikes near 20% and around 10% facing jumps above 40%. 

Fixed vs. variable and the renewal crunch

“Affordability stays exactly where it is with today’s hold, and that consistency is meaningful for buyers,” said Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert.

“Many who’ve been waiting for clearer direction see a hold as confirmation that we’re at the bottom of the rate cycle. That sense of predictability often encourages buyers to act before spring competition picks up.”

“Five‑year bond yields have climbed in recent weeks,” Zlatkin said. “That movement is pushing fixed rates higher, and in the last four days we’ve seen promotional specials disappear as lenders reprice.”

Variable rates, she added, remain cheaper than comparable fixed products, but she cautioned that they “may not fall much further, and over the next five years they could rise above today’s fixed rates.”

Commercial outlook and longer‑term risks

On the commercial side, Avison Young’s Canada president, Mark Fieder, said the hold has been widely anticipated and signalled a prolonged pause “barring any developments warranting a cut.”

Lower rates, he said, would be “preferred for commercial real estate, stimulating investment opportunities for those who have been on the sidelines as well as those who have already been actively investing in sectors like multifamily, industrial, and retail.”

Many fixed‑rate borrowers are bracing for a “shock” at renewal as they rolled into higher rates, with analysts warning that payment increases in the coming years could be substantial yet still manageable for most owners in the absence of a severe downturn.

Royal LePage president and CEO Phil Soper framed the rate backdrop as no longer the chief headwind. “Mortgage rates are no longer the villain in this story. Borrowing costs have stabilized at a level that supports healthy market activity. Buyers can move forward without worrying they are missing out on cheaper money tomorrow. That clarity alone will unlock demand,” he said in the company’s 2026 Market Survey Forecast.

For brokers and lenders, rates have steadied, but fixed costs are creeping up and a renewal wave is still coming. Clear guidance on terms, amortization and refinancing remain crucial to help borrowers stay on track.

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Bank of Canada delivers final rate decision of 2025

The Bank of Canada has left interest rates unchanged in its last decision of the year, holding the policy rate steady amid lingering uncertainty over inflation and the economic outlook.

The central bank said on Wednesday morning it was keeping the benchmark rate – which leads variable rates and home equity lines of credit (HELOCs) in Canada – at its current level of 2.25%, hitting pause on cuts in a decision that had been widely anticipated by financial markets.

It said it views the current policy rate as "at about the right level" to keep inflation concerns in check and manage the economy through its current challenges, suggesting that interest rate cuts in early 2026 could be off the table. 

The announcement means the Bank rounds off 2025 with its policy rate a full percentage point lower than where it sat at the end of last year, following four 25-basis-point cuts. 

No surprise for markets as BoC opts for a hold

After its last decision – a quarter-point cut on October 29 – the central bank’s governor Tiff Macklem hinted that a rate hold was its likely next step.

And a surprisingly strong jobs report for November appeared to rubber-stamp that decision, with the economy adding about 54,000 jobs last month as unemployment slipped to 6.5%.

Those numbers outstripped economists’ expectations, even though part-time work contributed to most of November’s labour market gains, and Royal Bank of Canada (RBC) assistant chief economist Nathan Janzen said in the wake of that announcement a BoC hold was now even more likely than before.

Even with the Federal Reserve poised to cut later today in the US, Bank of Montreal (BMO) chief economist Doug Porter signalled last week that the Canadian central bank was unlikely to bring rates lower.

“After leading the world on the way down in 2024, and following up with 100 bps of cuts this year, it increasingly appears that the Bank of Canada is now done,” Porter wrote.

“While the BoC leaned that way after its prior decision in October, the run of data since then has been so firmly planted on the strong side that market chatter is now that the next move could be a hike (albeit well down the road).” 

Resilient economy strengthened case for BoC pause

Analysts have also highlighted a Canadian economy that appears to be strengthening after absorbing the initial shock of US president Donald Trump’s tariff regime, launched earlier this year.

In the third quarter, Canada’s gross domestic product (GDP) posted a surprising jump, rising by 2.6% and defying predictions from earlier in the year that the economy would buckle under the weight of those Trump tariffs.

The Bank’s first decision of 2026 will arrive on January 28, followed by seven subsequent rate announcements: on March 18, April 29, June 10, July 15, September 2, October 28, and December 9.

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We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!