Condo buildings continue to be built around Vaughan Metropolitan Centre, in August. Potential home buyers are fretting about the strength of the economy, the health of the labour market and the direction of interest rates.Sammy Kogan/The Globe and Mail
Real estate buyers, sellers and market watchers in Toronto and cities across Canada are entering the key fall selling season with trepidation as trade tensions linger in the background.
Daren King, senior economist at National Bank of Canada, remains hopeful that Canada and the United States will reach a deal that ends trade war turbulence.
If so, the economic uncertainty may turn out to be a short-term phenomenon, Mr. King said in an interview.
In the meantime, the disruption is a major headwind likely to hold back aspiring home buyers across the country in September.
In August, sales across Canada decreased 0.7 per cent from July on a seasonally adjusted basis, data from the Canadian Real Estate Association show.
New listings surged 3.3 per cent in the same period.
Mr. King notes there is a very strong correlation between consumer confidence and the home resale market in Canada.
Many consumers are likely wondering about the prospects for the economy in general and their own job security, he notes.
“The situation is very fluid.”
He won’t be surprised to see real estate sales in the Greater Toronto Area and many cities remain flat or decline in September after a lacklustre August.
What the trade war and U.S. policy mean for Canadian mortgage rates
Sales in the Vancouver area rose in August compared with July, but the cooling in the GTA and Calgary offset that rise, notes National Bank senior economist Alexandra Ducharme.
Sales in Vancouver and the GTA remain well below their long-term averages, Ms. Ducharme points out.
Sales in the GTA in August slipped 0.3 per cent from July on a seasonally-adjusted basis, according to CREA.
Although it is not uncommon for the market to take a breather after a string of gains, Mr. King says, he does not believe the decline in August represents a temporary blip.
Realtors hoping for a rebound get side-swiped by trade war
The slowdown was likely caused by the uncertainty surrounding trade, which intensified during the month.
Sales in Vancouver and the GTA remain well below their long-term averages, says National Bank senior economist Alexandra Ducharme.Sammy Kogan/The Globe and Mail
Meanwhile, some of the potential buyers still waiting to purchase a first home or trade up to a more desirable one are fretting about the strength of the economy, the health of the labour market and the direction of interest rates.
Mr. King sees no rush for the Bank of Canada to raise its benchmark rate, despite policy-makers’ concerns about an upside risk to inflation. A prolonged trade war might even justify a decline in short-term interest rates, he says.
“We’ll have to see where all this is going.”
The dynamic at the long end of the curve is a different story.
Like many financial market mavens, Mr. King is keeping an eye on the rise in long-term bond yields in the United States.
Spiking oil prices recently pushed the 10-year U.S. Treasury yield above the psychologically important threshold of five per cent.
At the same time, the burgeoning U.S. government deficit is spooking investors and raising questions about fiscal sustainability.
The massive play on AI has technology companies issuing huge amounts of debt, creating lots of crowding in the bond market, he points out.
“Everything is pushing interest rates higher,” Mr. King says, adding that the trends will create significant headwinds for housing in the medium term.
For now the impact remains limited, he says.
On the front lines of trade war, cities begin to reckon with its financial toll
Climbing U.S. Treasury yields influence borrowing costs in this country, including those for fixed-term mortgages and consumer debt.
While he watches those forces, Mr. King notes that housing affordability has been improving in Canada with the decline in prices in many markets.
The second quarter of 2026 brought a tenth consecutive quarterly gain in affordability, which marks the longest streak on record in this country.
In Toronto, that trend could tempt some of the plentiful home buyers who remain on the sidelines, Mr. King notes.
“There are people who want to jump into that market,” the economist says.
The tariff situation can change overnight, he notes, and hesitant home buyers are likely to perk up if a deal comes together.
“If there is negotiation, we have seen it can go pretty fast.”
“It’s the same story we’ve seen in a loop – for the past two years – every time the trade discussion starts up.”
Tariffs on U.S. homebuilding materials will raise costs, industry warns
So far in September, buyers do not appear to be in any rush in Toronto, says Dino Capocci, real estate agent at Royal LePage Real Estate Services.
On one recent day, for example, he counted 100 new listings for detached houses in midtown Toronto on the Multiple Listing Service of the Toronto Regional Real Estate Board.
The same day, nine sales were recorded.
“I am seeing a lot more listings than I am sales,” says Mr. Capocci.
Mr. Capocci says properties are changing hands, but the pace is sluggish.
“There are sales out there. It’s not dire.”
Mr. Capocci listed a two-bedroom row house in Cabbagetown in August, figuring he would get a jump on the fall market.
The house at 7 Bowman St. is listed with an asking price of $1.895-million, which is slightly below the price the homeowner paid before the top-to-bottom renovation.
“Even at that, I’m not feeling the love,” says Mr. Capocci. “August was definitely slower than expected.”
In August, sales in the GTA dipped 2.1 per cent compared with the same month last year, while new listings fell a sharp 14.1 per cent in the same period.
Active listings dropped 11.3 per cent last month from August, 2025.
Mr. Capocci believes many sellers who put properties up for sale in the spring and failed to sell pulled their listings last month. Some of the September bump is likely coming from relistings, he says.
Pedestrians pass real estate signage around new condo buildings Vaughan, Ont., in August.Sammy Kogan/The Globe and Mail
The condo segment remains bleak, in Mr. Capocci’s view.
At mid-September, he trimmed the price for a renovated unit at the Lonsdale at 619 Avenue Rd. to $1.479-million.
“With condos, it’s a constant adjustment,” he says of the price reductions.
Mr. Capocci recently talked with an agent who listed a condo in the hard loft conversion at 90 Sumach St.
The owner paid $1.2-million a couple of years ago, Mr. Capocci says, and the unit was listed with an asking price of $998,000.
He learned that the seller was hoping for a higher price but now the lender is moving to sell the property under the process known as “power of sale.”
“The “power of sale has started,” he says. “The bank is going to take over.”
The single-family market is brisk in some brackets, he adds.
Houses do sell with multiples offers, he notes, but they tend to be in most sought-after neighbourhoods in the popular price range around $1.5-million.
The buyers are rarely investors or builders, he says, but “end users” who plan to live in the home.
Those who do enter bidding contests are careful to stick to a budget, he adds.
“They are not losing their minds any more. We’re seeing a lot more restraint with buyers. There’s not that fear of missing out.”
Mr. Capocci says most sellers he has spoken with who decided to list this fall intend to stick with their plan.
Many realize that a rebound in prices is not likely to happen soon.
He points to the example of a Deer Park house he estimated would sell for about $2.2-million when the sellers called on him to evaluate the property just over three years ago.
Now he plans to bring the property out in a few weeks with an asking price of $1.7-million.
“If you’re postponing because of price, I would strongly suggest against that,” Mr. Capocci says. “There’s no certainty in putting it on hold.”