Toronto | November 18, 2025 — 09:00 EST

Canadian home sales recorded another month of growth in October, extending a recovery that has quietly but steadily taken shape across the country. According to new data from the Canadian Real Estate Association (CREA), national home resales increased 0.9% in October compared with September, marking the sixth monthly gain in the last seven months. The trend offers an early signal that softer borrowing costs and a stabilizing rate environment are beginning to support activity in the housing and mortgage markets after a long period of subdued demand.

The improvement is modest, but it arrives at a moment when buyers had been cautious for nearly two years due to elevated interest rates, tight affordability, and economic uncertainty. CREA’s October results provide the clearest evidence yet that some Canadians are gradually re-entering the market—or at least testing the waters—as mortgage costs ease from their peaks earlier in the cycle.

Why October’s Sales Increase Matters for Mortgage Borrowers

One of the key drivers behind October’s momentum is the continued easing in borrowing costs, particularly on fixed-rate mortgage terms. Bond yields, which heavily influence 3- and 5-year fixed mortgage pricing, have declined meaningfully since early fall. As lenders gradually pass those changes through to consumers, qualified borrowers are finding slightly better affordability conditions than they faced during the summer.

Lower financing costs help stimulate purchase demand in two main ways:

1. More buyers can qualify.
Even a small reduction in mortgage rates can improve debt-service ratios enough to help marginal borrowers secure approval.

2. Monthly payments become more manageable.
For middle-income households, every 10–20 basis points of rate relief creates a noticeable difference in budget planning, especially for first-time buyers.

For mortgage lenders, brokers, and insurers, a pickup in sales typically translates to higher origination volumes. Renewals and refinances also tend to rise when overall activity improves, as borrowers look for opportunities to reset terms or restructure higher-cost debt.

However, a more active real-estate market comes with a flip side: home prices may firm up or rise, especially in regions where supply remains structurally limited. That can create affordability challenges for first-time buyers choosing between stretching budgets or delaying purchases.

Caution Flags: Why This Recovery May Be Fragile

Despite the renewed momentum, analysts caution that this improvement may not be guaranteed to continue through the winter and early spring of 2026. One of the biggest concerns is Canada’s broader economic exposure to the United States.

Approximately 75% of Canada’s exports go to the U.S., making the Canadian economy highly sensitive to U.S. growth, manufacturing cycles, and consumer demand. A slowdown south of the border—particularly if tied to labour-market softening or fiscal tightening—could quickly spill over into Canada through weaker employment, reduced household income growth, and slower business investment.

A softer job market would directly impact real-estate activity. If incomes stagnate or unemployment rises, even modest improvements in mortgage rates may not be enough to sustain sales growth. Higher-risk borrowers could face difficulty renewing at higher rates, and lenders may encounter rising arrears in vulnerable segments.

Potential Pressure Points Ahead

CREA officials note that while the October numbers are encouraging, several underlying risks remain:

• Renewal shocks. Many fixed-rate borrowers will roll off ultra-low pandemic-era mortgages in 2026–27, facing payment increases that could exceed 40–60%.
• Regional disparities. Markets such as Calgary continue to outperform, while parts of Ontario and British Columbia remain sluggish.
• Supply limitations. National inventory is still historically tight, amplifying price pressure when demand picks up.
• Consumer confidence. Economic uncertainty continues to hold some buyers back despite lower rates.

For buyers and homeowners entering the market, the October sales uptick is a positive sign of improving conditions—but stability is not guaranteed. Borrowing costs may continue to ease gradually, but the broader economic backdrop remains uncertain enough that households should plan with caution.

If you are considering buying, renewing, or refinancing, the next few months could offer improved opportunities—provided you align your timing with the right rate strategy and stress-test your budget carefully.

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