Finally, a bit of good news as Statistics Canada redoes its numbers
Canada’s economy has managed to shake off its mid-year slump, and the housing market is showing some early signs of waking up with it.
New GDP numbers from Statistics Canada point to a modest rebound in the third quarter of 2025, with real GDP rising 0.6% after a spring decline.
Beneath that headline, though, the mix of housing activity tells a story familiar to anyone watching Canada’s market: buyers are coming back, existing homeowners are repairing and upgrading, and new construction is still struggling to keep up.
One of the standout numbers is the jump in ownership transfer costs, a measure tied to home resales. Those costs climbed 9.1% in the third quarter, marking the second straight increase after a rough start to the year.
Most provinces saw stronger resale activity, suggesting that lower borrowing costs and rising wages may be giving buyers a reason to return. Renovation spending also increased, which often happens when Canadians feel stuck between high prices and limited new listings.
Charts in the report, including the housing investment breakdown, show a clear pattern: resale and renovation activity are pulling more weight, even as new construction lags.
New construction still in a slump
The biggest concern for the long-term health of the country’s housing market came from new home construction, which fell again in the quarter. Activity dropped 0.8%, with declines in apartment construction across almost every province except Nova Scotia and BC.
This is the part of the housing system that Canada desperately needs to fire on all cylinders, and right now it isn’t. Labour shortages, high financing costs for developers and uncertainty around demand continue to hold back new projects.
For those in real estate, this continued softness signals that supply pressures aren’t going anywhere. If buyers return faster than builders do, home prices could find upward momentum again.
Mortgage interest costs finally slip
There was at least one piece of good news for stretched borrowers: mortgage interest payments dropped. Total household property income payments, which include mortgage interest, fell 0.6% as the Bank of Canada’s rate cuts filtered through the economy.
More than two-thirds of that decline came from lower mortgage interest alone.
It’s a meaningful shift after years of rising payments. While households aren’t suddenly flush with cash, the slight easing could stabilize borrowers who’ve been under pressure from renewals or floating-rate mortgages.
The broader backdrop: cautious households, flat businesses
The housing story doesn’t exist in a vacuum. The same report shows:
- Household spending dipped 0.1% as vehicle purchases fell.
- Business investment was basically flat, with declines in machinery, equipment and non-residential building.
- Wages rose in most industries, including finance and real estate, helping household incomes edge higher.
Canadians saved a little more too. The household saving rate ticked up to 4.7% , reflecting a mix of caution and slightly improved incomes.
What it means for the housing and mortgage industry
The third-quarter numbers point to a market that’s picking up steam but still facing big structural challenges.
Resale markets could see more activity heading into 2026 as lower mortgage costs work their way through. Lenders may notice more pre-approvals and renewed home searches as confidence slowly returns.
But the persistent decline in new construction means Canada is still not building enough. With population growth remaining strong, this continues to push long-term affordability further out of reach.
Renovation spending is likely to stay solid, creating opportunities for HELOCs and refinancing products. And the easing of mortgage interest payments should offer a small but welcome buffer for borrowers and lenders keeping a close eye on risk.
A market stabilizing, but not really cooling
Overall, the report paints a picture of a housing market that’s no longer in deep freeze but remains constrained. Buyers are creeping back in. Borrowers are feeling a little less squeezed. But builders are still stuck in the mud, and that imbalance is shaping the sector more than any single quarter’s GDP reading.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
