TD Economics: Canada’s economy flatlined in February, small rebound expected in March

From TD Economics

The economic momentum that carried into the early stages of 2025 is starting to wane. With the information we have at hand, Q1-2025 growth is tracking around 1.5%, a few ticks below the Bank of Canada’s April MPR projections. Past this, the outlook is turbulent, with clear downside risks to Canada’s economy as the direct impact from tariffs add to the headwinds from plunging sentiment.

Policymakers at the BoC have their work cut out for them. The Bank opted to hold the policy rate steady at 2.75% last meeting, despite appearing reasonably downbeat about economic growth prospects highlighted in their scenario analysis. With Canada’s housing market visibly strained, and some rollover in labour markets and consumer spending, we’d expect the BoC to cut its policy rate by 25 bps at their next meeting in June. Source: https://economics.td.com/ca-real-gdp

Canadian Homes Sales Drop as CREA Downgrades 2025 Forecast

It seems a rebound in home sales isn’t such a slam dunk after all.

The Canadian Real Estate Association (CREA) recently revised its 2025 housing forecast to adjust for the uncertainty of tariffs and any economic turmoil that may come with it. Looking at the updated quarterly forecast, CREA is accounting for 50,000 less home sales in 2025 than originally forecast (totaling 482,673 residential properties—virtually unchanged from 2024) and the average price of a home to be $30,000 less than originally forecast (hitting an average of $687,898 in 2025). Of course, there are many factors at play. Shaun Cathcart, CREA’s Senior Economist, said the only other time it has been this difficult to provide forecast updates was the beginning of the COVID-19 lockdowns.

“It’s been a very big change, in a very small amount of time,” Cathcart said on the CREA Housing Market Report.

To put things into perspective, home sales in March hit a level Canada hasn’t seen since the 2008 financial crisis.

“Up until this point, declining home sales have mostly been about tariff uncertainty. Going forward, the Canadian housing space will also have to contend with the actual economic fallout,” Cathcart said in a CREA media release.

Ontario and British Columbia were hit hard with declining home sales, but for the most part, sales are down all over Canada. Since November 2024, national home sales are now down 20%.https://www.crea.ca/cafe/canadian-homes-sales-drop-as-crea-downgrades-2025-forecast/

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