May Housing Rebound

The rise in home sales in May suggests a recovery is underway in the housing market following a tariff-induced shock.

The 3.6% m/m rise in home sales in May marks the first consecutive month of demand growth in over half a year, after sales edged up in April.

The National Average Home Price also increased +1.70% month over month, while still down -1.80% year over year.

Regarding inventory, National resales dropped to 4.88 months. This is down from April’s nearly five-year peak.

That’s in line with the average given the 20-year mean is 4.87 months.

CPI Data

Headline inflation remained at 1.7% in May, its second month below target, albeit largely due to the removal of the carbon tax in April. Stripping out energy, CPI inflation eased to 2.7%, from 2.9%.

Core inflation is heading in the right direction, with the 12-month and 3-month core measures sliding back to 3.0% – the ceiling of the Bank of Canada’s target.

Summary of Deliberations

The Summary of Deliberations from the Bank of Canada’s June policy meeting was released last Tuesday. It revealed the BOC held rates for three reasons.

1. The economy had slowed but not significantly
2. Uncertainty remained high
3. Recent inflation data had firmed.

These communications suggest the Bank is growing increasingly concerned about stubbornly high core inflation, with Macklem also warning “we can’t let a tariff problem become an inflation problem”.

Elevated core inflation appears to be presenting a more significant obstacle to further policy loosening.

Key data released between now and then – including May and June CPI reports and a range of activity indicators including the hope a new Canada–US trade deal could be in place, with Prime Minister Mark Carney pushing for a deal to be reached within the next 30 days

Here’s how market-driven probabilities for the next meetings are lining up:

• For the Bank of Canada meeting on July 30:
  • 25 bps cut: 33% chance
  • No change: 67% chance
  •  
• For the Federal Reserve meeting on July 30:
  • 25 bps cut: 19% chance
  • No change: 81% chance

Insured Mortgage Data

First-time-buyer types are making use of the Finance Department’s new guidelines. The share of insured mortgages that had 30-year amortizations soared to 37.4% in the first quarter, from 3.5% in Q4.

Meanwhile, hiking the insured loan property value cap to $1.5 million didn’t spark much of an increase in activity. Only 1 in 50 CMHC deals was for a home priced over $1 million in Q1.

Having said this, our office has noticed an uptick in insured purchases in areas such as Etobicoke and Leslieville where many freehold homes are priced between $1,000,000 and $1,499,999.

Employment Insurance (E.I)

A troubling data set; 520,000 Canadian’s are now receiving EI.

This is up 12.70% from just 1 year ago.

Canada’s Zero Population Growth in Q1

From January 1 to April 1, the population grew by just 20,107 people (+0.0%), reaching 41,548,787, according to new estimates from Statistics Canada.

That’s the slowest quarterly pace of growth since the early pandemic days and the second-weakest in nearly 80 years of record-keeping.

The slowdown reflects the federal government’s efforts to reduce both temporary and permanent immigration.

The number of non-permanent residents fell by over 61,000 in the quarter, led by a sharp drop in international student permit holders, particularly in Ontario and British Columbia. Stats Can noted that this reduction “is counter to the typical seasonal pattern of an increase in the first quarter.”

Ontario Place Renderings

The Ontario Government released final designs for the revitalization of the long-neglected Ontario Place, alongside a press release outlining the extensive redevelopment plans envisioned for one of Toronto’s most-prized strips of waterfront.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.35%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.30%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.04%
• 5 year variable, up to 30 amortization – Prime – .75% = 4.20%

Fast Facts

• 4,8000,000 – New homes that Canada will need to build over the next 10 years to restore 2019 affordability levels, per a new report. Home building rates will need to double to meet that demand.
• US$1,760 – How much more U.S. buyers are expected to pay for new vehicles thanks to auto tariffs. Automakers are likely to pass 80% of the $30 billion tariff bill onto buyers.
• 50% – Decline in new graduate hiring by Big Tech since 2019, according to a recent Signal Fire report. Some experts have pointed to AI replacing entry-level jobs as a top contributor.
• US $28,000,000 – Sponsorship money that Cooper Flagg, who was picked #1 by the Dallas Mavericks in the NBA Draft, reportedly made as a college athlete last year at Duke.