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HomeUncategorizedHome Sales Spike Defies Expectations, Economist Cautioning BoC's Inflation Management.

Home Sales Spike Defies Expectations, Economist Cautioning BoC’s Inflation Management.

Home Sales

Canada’s housing market’s surge in momentum ahead of potential interest rate cuts could have spillover effects on the broader economy, according to Scotiabank Senior Economist Farah Omran. The trend continued into January, indicating that the surge in home sales occurred before the Bank of Canada’s potential interest rate cuts.

House prices have not increased with sales growth, but this is typical. Prices usually lag sales increases or declines. Price increases could occur in the next few months. The Canadian Real Estate Association reported surprise gains in home sales in December, rising 3.7% compared to the same month a year earlier.

Home sales in the Greater Toronto Area increased by 11.5% in December compared to the previous year, according to the Toronto Regional Real Estate Board. In Vancouver, sales rose by 3.2%. However, the increase in buying activity could cause inflationary pressures and complicate the central bank’s efforts to bring inflation back to its 2% target.

The Bank of Canada’s mission is influenced by housing sales, which in turn increase economic activity. This leads to spillover effects on other sectors like furniture and renovations. As a result, the Bank is actively attempting to slow down economic activity to create an excess supply and bring inflation back to target.

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