CMT Weekly Briefing: Inflation, home sales and tariff deadline in focus

Canadian inflation and housing figures will offer new readings on the economy this week, while Wednesday’s tariff deadline could determine whether nearly US$20 billion of Canadian exports face new 50% U.S. duties.

The calendar also includes housing starts, retail sales and the Bank of Canada’s Senior Loan Officer Survey, which will provide an update on lending conditions heading into the fall.

What we’re watching this week

Inflation — Monday

Statistics Canada will release its July Consumer Price Index on Monday. The annual inflation rate slowed to 2.8% in June, helped by a 10% monthly drop in gasoline prices.

The July report should provide more evidence on underlying price pressures, particularly in shelter and other services. It will also help shape the debate over whether the Bank of Canada’s next move will eventually be a rate increase or whether the policy rate can remain at 2.25% through 2027.

BMO last week maintained its forecast for the Bank to hold its policy rate through the end of next year.

Home sales and housing starts — Tuesday

The Canadian Real Estate Association will publish July home sales and MLS Home Price Index data on Tuesday. CREA recently revised its 2026 outlook and now expects national sales to fall 1.4% this year, reversing its previous forecast for a 1% increase.

July results from regional real estate boards showed continued weakness in several major markets. Sales declined year over year in Toronto, Vancouver, Montreal, Calgary and Saskatchewan, although market conditions and price movements varied considerably by region.

Canada Mortgage and Housing Corp. is also expected to release July housing-start data Tuesday. U.S. housing starts, building permits and pending home sales are due the same day.

U.S. tariff deadline and Federal Reserve minutes — Wednesday

A new round of 50% U.S. tariffs on nearly US$20 billion of Canadian goods is scheduled to take effect Wednesday. Unlike many earlier U.S. tariffs, the proposed duties would also apply to products that comply with the Canada-U.S.-Mexico Agreement.

Canadian and U.S. officials continued negotiations through the weekend, but both sides acknowledged that significant issues remained unresolved ahead of the deadline.

The U.S. Federal Reserve will also publish minutes from its latest policy meeting Wednesday afternoon. The Fed held its target range at 3.50% to 3.75% in July in a 9–3 decision. The minutes may shed more light on how officials are weighing inflation risks against signs of slower economic growth.

Retail spending and lending conditions — Friday

Statistics Canada will release June retail sales Friday after its preliminary estimate pointed to a 0.4% monthly increase. Retail sales rose 1% to $73.7 billion in May.

The Bank of Canada’s second-quarter Senior Loan Officer Survey will follow later Friday. The report tracks business-lending practices and credit demand and could show whether lenders have tightened their standards amid trade uncertainty and rising consumer insolvencies.

Preliminary August purchasing managers’ indexes are also due Friday, providing an early reading on business activity this month.

Last week in Canadian mortgages

Mortgage portfolios continued to expand

Several lenders reported mortgage growth in their second-quarter results.

RFA’s first-half mortgage originations rose 35% to $3.5 billion, including approximately $2.1 billion in the second quarter. The lender also completed a record $1.84 billion in off-balance-sheet originations during the quarter.

Desjardins’ residential mortgage portfolio increased 8.3% from a year earlier to $206.8 billion, while Manulife Bank reported a 12% increase in mortgage balances to $28.7 billion.

There were also signs of further expansion in the broker channel. M3 began onboarding National Bank, while Tru Cooperative Bank reported more than $100 million in approved Ontario mortgage volume.

Rental demand strengthened as the condo pipeline shrank

Condo leasing across the Greater Toronto and Hamilton Area reached a second-quarter record of 18,923 units, up 5% from a year earlier, according to Urbanation.

Active condo rental listings declined 13%, while average rents increased 2.5% from the first quarter. Urbanation said demand is beginning to outpace supply as condo completions slow.

Although purpose-built rental construction has increased, the number of condominium units under construction across the region was down 39% from a year earlier. Investor-owned condos have traditionally provided a significant share of the GTHA’s rental supply.

Household credit pressures remained elevated

Canadian consumer and business insolvencies rose 9.4% in June on a seasonally adjusted basis and were 11.5% higher than a year earlier.

Consumer proposals continued to account for roughly three-quarters of filings, as more borrowers turned to negotiated repayment arrangements rather than bankruptcy.

Regulatory enforcement also remained in focus. Ontario’s regulator revoked a brokerage licence and fined a broker $85,000, while a former British Columbia mortgage broker was permanently barred and fined in a separate proceeding.

Canadian bank valuations moved higher

The financial sector’s share of the S&P/TSX Composite Index rose to 37%, up from 31% in March and its largest weighting in eight years.

Canada’s five largest banks are now trading at an average of 15 times projected earnings, compared with 12 times for their largest U.S. counterparts. Those valuations will face another test when the Big Six begin reporting quarterly earnings during the final week of August.

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