Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Real Estate Went From A Shortage To Surplus, Starts Plunge
Canada’s new home starts fell to a SAAR of 245,800 units in August, down 16% from July. But this isn’t a problem of red tape—approved permits hit a record ~350,000 units, and builders are sitting on 12,000 completed but unsold homes, nearly 50% above the long-term average. The real issue is weak demand at current price levels, made worse by state-backed stimulus that’s fueling construction and propping up input costs, preventing the price relief the market needs.
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Canadian Governments Borrow Most Since Pandemic, Record Bank Demand
Canadian governments are borrowing at the fastest pace since the pandemic, with net issuance hitting $71.3 billion in Q2 2025—up 53.3% from last year. It’s the most credit sought since 2021, when emergency supports like CERB peaked. Domestic banks absorbed most of the issuance, setting a second straight quarterly record. That concentration signals rising risk: crisis-level borrowing with limited foreign appetite means the warning signs aren’t just local.
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Canadian Real Estate Sees Sharpest Price Drop In A Year, Record Inventory
Canadian real estate prices made the sharpest drop in a year amidst record inventory and weak sales. The price of a typical home fell 0.9% to $686,800 in August, down 3.4% from last year. While sales rose 1.8% from last year to 40,257 homes, they remain well below pre-pandemic norms. At the same time, new listings surged 6.1% higher—three times the growth rate of sales—setting a new August record.
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Bank of Canada Cuts on Trade Fears. Here’s What Historically Follows
The Bank of Canada slashed its key policy rate by 25 basis points to 2.5% this week, citing trade-driven demand shock. Historical data shows the past three times the central bank slashed rates to address trade, cheap credit flowed into undesirable areas. Using broad monetary stimulus to solve a narrow problem rarely works, but maybe this time is different. It always is—until it isn’t.
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Canadian Inflation Accelerates, Lofty Core Makes BoC Cuts Difficult
Canadian headline inflation accelerated to 1.9% in August, up from 1.7% in July. The less volatile and BoC-preferred core inflation measures were even higher—with all measures above the 2.0% target, and two breaching the upper bound of the 1–3% control range. Despite the BoC cutting rates, inflation at this level raises the risk of the central bank losing control.
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