Photo: James Bombales

While there are many factors that affect the Canadian economy, the one that often gets the most lip service is its housing market. And, according to TD senior economist James Marple, there’s a good reason for that.

“The…key question for Canada’s economy is, of course, the fate of the Canadian housing market,” he writes in a recent note.

That fate is starting too look up, as housing data suggests that markets continued to warm up in July, having finally adjusted to the effects of a new mortgage stress test which came into effect on January 1.

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“Early data for the month of July reported this week was mixed, but overall suggest that the worst of the housing correction is in the rear-view mirror,” writes Marple.

He notes that GTA home sales were up 6.6 per cent in July, with a sales-to-new-listings ratio just about 50 per cent.

“The [bump in the ratio is] up from a trough of 44 per cent in March, while average prices rose 3.1 per cent month-over-month,” he writes.

Sales have also inched upwards in Vancouver, although Marple notes that the growth in home prices slowed to its softest pace since 2015.

It’s not the first time economists have predicted that the housing market might finally be over its policy-induced slump. When sales rose in June for the first time in months, many predicted that it would be the start of a warming phase for the market.

“Historically, the impact of policy changes is swift but short-lived, and it seems that housing market is once again finding its footing. We expect that resale activity hit its trough in Q2 and will begin to gradually recover thereafter,” wrote TD Bank Economist Ksenia Bushmeneva in a note last month.

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