Rate Hike Meets a Cooling Market: Home Sales, Prices and Starts All Slip

The Bank of Canada raised its key interest rate by a quarter point on Oct. 28, and the data released since then suggests the move landed on a housing market that was already shrinking, with buyers, sellers and builders all pulling back at once.

The central bank lifted its policy rate to 2.50 per cent from 2.25 per cent, which the Canadian Press reported was the first increase in more than three years. Speaking after the decision, senior deputy governor Carolyn Rogers described the outlook for housing as subdued. “Certainly, borrowing rates are currently weighing a bit on the housing market,” she said, according to the Canadian Press.

What the hike means for payments. Ratehub.ca calculated that on a home priced at $666,538, with 10 per cent down and a 25-year amortization, the monthly payment on the lowest variable rate rises to $3,154 from $3,072. That is $82 more a month, or $984 a year. The price matches the Canadian Real Estate Association’s national average sale price for September, which CREA put at $666,538, down 1.6 per cent from a year earlier. Fixed rates are not directly tied to the overnight rate. Ratehub listed the lowest five-year fixed rate at 4.34 per cent.

Shawn Zigelstein, a broker with Royal LePage Signature Realty, told the Canadian Press that a quarter-point change “really shouldn’t make too much of a difference on someone’s mortgage payments at this point.” Phil Soper, chief executive of Royal LePage, took a harsher view, saying “prolonged weakness is already weighing on economic growth, and higher borrowing costs will only deepen that challenge.”

Toronto: sales, listings and prices all lower. The Toronto Regional Real Estate Board reported on Nov. 4 that 5,603 homes changed hands in the Greater Toronto Area in October, down 7.9 per cent from a year earlier, according to a Canadian Press report carried by BNN Bloomberg. New listings fell 11.9 per cent to 14,173. The average selling price was $1,024,108, down 2.7 per cent, while the composite benchmark price was down 4.3 per cent. Sales did rise 1.2 per cent from September on a seasonally adjusted basis.

TRREB president Daniel Steinfeld said buyers are watching Canada-U.S. trade negotiations and conflict in the Middle East, hoping for clarity on inflation and economic uncertainty before committing, the report said. The board blamed “uncertainty around inflation, borrowing costs and the economy” for keeping many buyers on the sidelines.

The pattern is the same nationally. Sales across Canada were down 7.7 per cent in September from the same month last year, the Canadian Press reported, citing CREA data. Taken together with the Toronto figures, the numbers point to falling prices and falling listings at the same time, a sign that sellers are also holding back instead of cutting prices to force deals.

Builders are not filling the gap. The Canada Mortgage and Housing Corporation said the seasonally adjusted annual pace of housing starts rose three per cent in September to 248,896 units from 242,223 in August. The six-month trend was virtually flat at 250,411 units, up 0.6 per cent. Underneath that, actual starts in urban centres of 10,000 people or more were 19,984 in September, down 11 per cent from 22,375 a year earlier. Through the first nine months of 2026, urban starts totalled 170,964, down four per cent from 178,033 in the same period of 2025.

Aled ab Iorwerth, CMHC’s deputy chief economist, warned that “a key risk for Canada now is not building enough during this period of softening housing markets across the country.” He added that Canada still faces a long-term housing supply gap. The Canadian Construction Association’s Nicole Emmett told the Canadian Press that higher borrowing costs squeeze contractors’ margins, according to the report.

What to watch. CMHC is scheduled to release October housing starts on Nov. 17, and the Bank of Canada has its next rate decision in December, Ratehub reported. The key test is whether the weak demand reflected in the TRREB and CREA figures eventually pulls construction lower, which would add to the supply concerns CMHC has flagged. For now, the data show a market where higher borrowing costs, trade uncertainty and inflation worries are keeping nearly everyone cautious.

Sources: Bank of Canada decision coverage by the Canadian Press via Advisor.ca (Oct. 28, 2026); Ratehub.ca (Oct. 28, 2026); Canadian Press via BNN Bloomberg on TRREB October data (Nov. 4, 2026); CMHC housing starts release for September 2026 and Canadian Press via BNN Bloomberg (Oct. 16, 2026). All photos are illustrative stock photography from Unsplash and do not depict any property discussed.