Canada's unemployment rate has surged to 7.1% in August 2024, marking the highest level since May 2016 outside of the pandemic era. This dramatic shift is creating measurable impacts across housing markets, with concrete data showing how employment conditions are directly affecting real estate transactions, pricing, and market dynamics.

The Canadian economy shed 66,000 jobs in August, following a loss of 41,000 positions in July. This consecutive monthly decline represents a total loss of 107,000 jobs over two months. The job losses were concentrated in specific sectors:

• Professional services: 26,000 positions eliminated
• Transportation and warehousing: 23,000 jobs lost
• Manufacturing: 19,000 roles cut
• Construction: 17,000 jobs added (the only bright spot)

Part-time employment took the heaviest hit with 60,000 positions eliminated, while full-time jobs decreased by 6,000. Despite these job losses, average hourly wages rose 3.2% year-over-year in August, down from 3.3% in July.

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Home Prices Under Pressure

The national benchmark home price was $693,300, showing a 0.7% decrease month-over-month and a 3.4% decrease year-over-year. This price decline correlates directly with the unemployment surge, as buyer demand weakens with job uncertainty. Canada's national average home price was $672,784 in July 2025, reflecting the ongoing pressure from economic uncertainty.

The MLS® Home Price Index (HPI) was unchanged month-over-month and was down 3.4% on a year-over-year basis. The actual (not seasonally adjusted) national average sale price edged up 0.6% on a year-over-year basis. Market dynamics shifted significantly with the national sales-to-new listings ratio rose to 52%, up from 50.1% in June and 47.4% in May, indicating a modest improvement in market balance despite employment challenges.

Residential sales activity reported through the MLS® Systems of real estate boards in Ontario numbered 16,341 units in July 2025. This was up by 11.4% from July 2024. Home sales were 1.8% above the five-year average and 12.8% below the 10-year average for the month of July. However, year-to-date performance tells a different story: On a year-to-date basis, home sales totalled 96,594 units over the first seven months of the year. This was a decrease of 7.1% from the same period in 2024.

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Rising Delinquency Rates

The mortgage delinquency rate kept rising in 2024, reaching 0.21% in Q4 2024. This is up from a record low of 0.14% in 2022 and 0.17% at the end of 2023. While still historically low compared to the 0.29% seen in 2019, the upward trend directly correlates with rising unemployment.

The geographic distribution of these increases isn't uniform, with the rise in mortgage delinquencies has not been even across Canada, reflecting regional employment variations.

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Pre-Construction Market Collapse

CMHC expects housing starts to slow down over the next three years, primarily due to declining investor interest in pre-construction condominium projects. Developers are struggling to sell enough units to fund new projects, particularly in Ontario, where a weaker resale and rental market is deterring new condo development.

The impact varies by province:

• Ontario: Severe slowdown due to weak investor confidence
• British Columbia, the slowdown in condo construction is expected to be less severe, as strong resale market activity is providing more stability
• Alberta, where the majority of buyers are end-users rather than investors, will see minimal impact on new construction

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Bank of Canada Action

The unemployment rate is projected to peak at 7.1% in late 2025 before easing next year. The Bank of Canada's rate cuts since June 2024 have yet to fully play out. U.S. trade tensions have been a drag on Canadian housing markets this year, despite the prime rate being 2.25% lower than it was in June 2024, highlighting how unemployment effects are overriding the typical stimulus from lower rates.

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Regional Employment Variations

Population growth has led to rapid expansion of the labour force but employment hasn't matched the pace. Unemployment remains high compared to last year. Saskatoon is the exception, where full-time employment has remained remarkably strong and unemployment low. This regional variation in employment is creating distinct housing market responses, with Saskatoon showing resilience while most other major centers face pressure.

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Market Recovery Timeline

Last fall's market recovery was interrupted by the trade war, but we expect it will resume as lower borrowing costs trickle through the economy, though the timing remains uncertain given persistent unemployment pressures. The housing market's response to the 7.1% unemployment rate isn't theoretical. These concrete numbers demonstrate measurable impacts on home prices, sales volumes, mortgage performance, and construction activity. The data shows unemployment is reshaping market fundamentals in real time, with effects varying significantly by region and property type. Understanding these quantified impacts helps market participants make informed decisions based on actual market performance rather than speculation about future trends.

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Contact Coldwell Banker Horizon Realty today for expert guidance tailored to current market conditions. Our experienced team can help you capitalize on opportunities created by shifting economic factors.