The Bank of Canada today increased its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.

Since the July Monetary Policy Report, global economic activity has remained resilient, despite higher energy prices. In the United States, the economy continues to grow at a robust pace, supported by consumer spending and AI-related investment. Growth in the euro area has been resilient and broad-based. After slowing in the second quarter, Chinese growth rebounded in the third quarter, owing to strength in exports and a pickup in fiscal spending. With persistently elevated oil prices and refinery margins, inflation has risen in most countries.   

Given the ongoing resilience of the global economy, the Bank has revised up global GDP growth slightly to 3.1% in 2026, while growth in 2027 and 2028 remains unchanged from the July projection at 3.2%.

Global financial conditions have tightened since July. Advanced economy sovereign bond yields are higher. Equity and credit markets have been volatile due to uncertainty about the outlook for the AI sector. The Canadian dollar had weakened somewhat on US-dollar strength but has since recovered to around 71 cents – the same as assumed in the July Report.

Growth picked up in Canada through the middle of the year. GDP growth was 3.3% in the second quarter, and recent indicators point to growth of about 2% in the third quarter. This is stronger than expected in the July Report. Consumer spending has been solid, even with slow population growth. Business investment rebounded, reflecting oil and gas sector activity and spending on machinery and equipment. Despite ongoing weakness in sectors affected by US tariffs, exports overall have strengthened, owing to robust US demand, higher energy production and increasing signs that businesses are adapting to the changing trade environment. The unemployment rate has been around 6½% for several months. A broad set of indicators continue to point to some excess supply in the economy.  

Owing to new US tariffs, growth is expected to slow in the fourth quarter of 2026, before picking up again in 2027. This rebound is supported by business investment, exports and fiscal measures. Consumption growth is expected to moderate and housing to remain relatively weak. 

The Canadian economy is expected to grow 1% in 2026, and 2% in 2027 and 2028. This is a somewhat stronger overall growth projection than the July Report. This forecast is still subject to considerable uncertainty, particularly regarding Canada-US trade relations.

Given persistently high oil prices, CPI inflation has been around 3% since April and is expected to rise to about 3½% by the end of the year. Excluding gasoline, inflation was 2.2% in September and measures of core inflation remain close to 2%. But cost pressures are building, with high fuel prices raising the costs of production and transportation. Imported industrial and electronics input prices have also increased. While businesses have mostly absorbed higher input costs so far, Bank surveys suggest cost pass-through will increase over the next year. Near-term household and business inflation expectations have risen, while longer-term inflation expectations remain well anchored.

The conflict in the Middle East is now in its eighth month and there is no clear path to resolution. The combination of higher-for-longer energy prices and increased pass-through adds to the persistence of inflation in the projection. CPI inflation is expected to average 3% in 2027, a percentage point above the July projection, then come down to 2% in the middle of 2028. The main sources of uncertainty around this forecast are developments in the Middle East and businesses’ responses to cost pressures.

In the outlook, inflation is higher and more persistent than in the July Report. Growth has picked up this year and is expected to recover further. Against this backdrop, Governing Council decided to increase the policy rate to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services. There could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully. The Bank remains committed to maintaining Canadians’ confidence in price stability.

September sales totalled 1,650 units, similar to August and nearly four per cent lower than in September 2025. While September sales typically pull back compared with August, stronger detached home sales helped prevent the typical seasonal pullback.

At the same time, new listings also rose from August, causing the sales-to-new-listings ratio to fall to 49 percent, leaving inventory levels relatively stable compared with August. Stable sales and inventory levels in September prevented any change in the months of supply compared with August, which remained at just under four months.

While the overall market is showing higher supply levels compared with sales activity, conditions vary significantly by property type. Detached properties remain in balanced territory, and the monthly boost in new listings supported gains in sales in September. Meanwhile, higher supply levels for apartment and row homes are contributing to buyer market conditions, as demand is spread across more alternatives in the rental and new home markets.

“The variation in market conditions between property types is related to where the supply was added. The construction boom over the past three years was mostly driven by gains in higher-density sectors, significantly increasing the supply of apartment and row-style homes,” said Ann-Marie Lurie, Chief Economist at the Calgary Real Estate Board (CREB®). “Meanwhile, detached homes did not see the same boost in construction, preventing broad-based supply growth. Thanks to a stronger job market and slower but positive net migration, housing demand has remained strong enough to absorb some of the supply, but not enough to offset the high-density supply added to the market, resulting in a more significant impact on prices for higher-density homes.”

As the market moves through the fall, it is not unusual to see some unadjusted monthly declines in prices. However, many of these adjustments were seasonal, as seasonally adjusted figures show that prices in September are relatively stable compared with August. The unadjusted residential benchmark price was $566,700, nearly one per cent lower than last year. Most of the price adjustments have occurred in higher-density row and apartment-style units, which have reported year-over-year declines of eight per cent and six per cent in September. Meanwhile, detached prices are one per cent lower than last year, mostly due to declines in the North East, East and North districts.

Detached

Sales in September reached 896 units, up from August and more than four per cent higher than last year. The improvement in sales was partly due to a boost in new listings in September compared with August, giving consumers more options. With a sales-to-new-listings ratio of 52 per cent and a months of supply at just over three months, conditions remained relatively balanced. However, conditions have varied across the city, with less than three months of supply in the North West, West and South districts, and nearly six months of supply in the North East district. While the overall market is relatively balanced, the unadjusted benchmark price was one per cent lower than last year. The decline was primarily driven by steep pullbacks in the oversupplied North East district. Meanwhile, prices were higher than last year in both the City Centre and West districts.

Semi-Detached

The year-over-year gain in sales was not enough to offset earlier declines, as year-to-date sales have declined by two per cent for a total of 1,678 sales. The decline in sales matched year-to-date declines in new listings, but a monthly boost in September listings caused the sales-to-new-listings ratio to dip to 45 per cent, contributing to monthly inventory gains and pushing months of supply to nearly four months. While this is a shift from the tighter conditions reported in this sector throughout most of 2026, it is too early to say whether this will continue into the final quarter. While unadjusted prices did trend down in September, much of the decline was in line with typical seasonal behaviour. The unadjusted September benchmark price was $685,200, comparable to levels reported last year at this time.

Row

Sales in September eased compared with August, while new listings rose, causing the sales-to-new-listings ratio to drop to 45 percent. This also contributed to higher inventory levels compared with both last year and August, resulting in the months of supply rising above four months for the first time since the beginning of the year. Additional competition from new units has weighed on resale activity, as the price spread between new and resale homes remains relatively narrow. The additional supply choice for buyers has also weighed on row prices, but not to the same extent as in the apartment sector. As of September, the unadjusted benchmark price was $412,400, down nearly six per cent from last year. While prices have declined across all districts, the steepest declines, at more than 11 percent, have occurred in the North East and East districts, while the smallest declines have occurred in the North West, at two per cent.

Apartment Condominium

Apartment sales improved from August, slowing the year-over-year pace of decline to 14 per cent. New listings also rose over August, with 343 sales and 717 new listings, leaving the sales-to-new-listings ratio at 48 per cent. The monthly gains in sales supported modest reductions in inventory levels and prevented any further increases in the months of supply, which remained just above five months. The excess supply of apartment-style units has weighed on prices throughout most of the year. As of September, the unadjusted benchmark price fell to $291,400, down more than one per cent compared with August and more than eight per cent lower than last September. While some of the monthly decline is seasonal, seasonally adjusted prices continued to decline.

REGIONAL MARKET FACTS

Airdrie

Sales in Airdrie continued to slow in September, contributing to the year-to-date decline of 13 percent. Sales slowed across all property types, as increased competition from the new home market and competing markets in Calgary and other surrounding areas are weighing on demand. While sales eased in September, new listings also slowed and inventories trended down compared with August. However, the pullback in sales outpaced the inventory declines and the months of supply rose to four months. Additional supply choice continues to weigh on prices as well. As of September, the unadjusted total residential benchmark price was $505,800, nearly four per cent lower than last year. Prices have eased across each property type, with the largest declines occurring for higher-density homes.

Cochrane

Despite the monthly pullback, sales remained higher than last year, and on a year-to-date basis, sales have increased by nearly six per cent. The rise in sales came with an increase in new listings, with new homes accounting for nearly 30 percent of this year’s total listings. With 163 new listings and 68 sales, the sales-to-new-listings ratio dropped to 42 percent in September, the lowest monthly level seen since January. This contributed to higher inventory and pushed the months of supply to five months. Despite this one-month shift, prices improved compared with August and are similar to last year’s levels.

Okotoks

An increase in new listings compared with sales caused the sales-to-new-listings ratio to drop to 76 per cent in September, still higher than most other areas, but below the ratios of more than 80 per cent reported over the past two months. With 122 units in inventory and 56 sales, conditions remain relatively tight with just over two months of supply. Despite tighter conditions, increased competition from the new home market and competing markets has weighed on prices earlier this year. However, with an unadjusted total residential benchmark price of $606,800 in September, prices are stable relative to last September and are only one per cent lower on a year-to-date basis.

Chestermere

Sales in September rose, helping to offset some of the gains in new listings. While the sales-to-new-listings ratio remained low at 38 percent, inventory levels trended down from August and brought the months of supply back below six months. Significant new construction in the area, along with competing supply in Calgary and other surrounding areas, has weighed on prices in Chestermere over the past few months. However, year-to-date prices are only one per cent lower than last year. The unadjusted total residential benchmark price was $690,200 in September, down from August but similar to last year’s levels.

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Courtesy CREB