BMO on The Day Ahead in Canada

08:02 AM EST, 01/15/2026 (MT Newswires) -- Canada's housing market was still chilled in December, with existing home sales falling 2.7% in the month (seasonally adjusted) and 4.5% from a year ago, said Bank of Montreal (BMO).

With new listings also down 2% in the month (+0.8% year over year), the market balance didn't change much at the national level, and remains balanced overall, noted the bank. Prices, however, continued to fade with the benchmark HPI down 4.0% year over year and finishing the year down 0.3% in December.

On the year, prices fell across British Columbia and Ontario, while rising in most other regions. Indeed, the discrepancy of price performance was getting wider by December, with the weakest markets -- for example, parts of the Greater Toronto Area -- down as much as 10% year over year, while some smaller markets in Atlantic Canada and Quebec posted increases of more than 10%.

With mortgage rates apparently locked in place this year, affordability still adjusting and investors gone to other asset classes, it's looking like another year of stagnant activity for Canadian housing, stated BMO.

Investors will also get readings on manufacturing and wholesale sales for November at 8:30 a.m. ET on Thursday, added the bank. This will help shape the November real gross domestic product call. Suffice is to say that, as it stands now, Q4 is looking like another "soggy" one for the Canadian economy.

Quebec's provincial premier resigned on Wednesday, ahead of a fall election, which is another reminder of the political uncertainty that lies ahead this year in the province, pointed out BMO. Current polls place the separatist PQ government in majority territory, which has naturally led to referendum chatter.

However, it might be premature to put a lot of weight on those polls with the CAQ and Liberals now both in the process of sorting themselves out -- in other words, leadership -- ahead of the election campaign. If the PQ maintains around one-third support, which is roughly consistent with separatist sentiment, how the remainder falls, and its efficiency, will likely determine the outcome and majority/minority status. It's probably too soon to get a clean read on that.

The uncertainty over sovereignty, at a time when trade uncertainty is already high and weighing on Quebec, is broadly not helpful for economic conditions, according to BMO. In past episodes where Quebec was either going through a referendum (mid-1990s) or threatening one (mid-2010s), the economy generally underperformed the rest of Canada, especially on business investment, while home price trends lagged notably.

In general, the threat has a way of delaying or scaring off new investment. Indeed, it was only after the separation threat abated in each episode that investment, home prices and the economy more broadly recovered back in line with national trends. The same can be said about provincial credit spreads through 2014, which widened under the PQ before a steady tightening run once the pro-growth Liberal government was elected in that year, putting separatism to rest for a period, noted the bank.

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