Houses for sale in Ottawa

December saw home sales post a surprising spike across many major Canadian markets, a development Porter noted this week may be greeted with dismay by observers hoping for imminent rate cuts by the central bank.

“While it’s always dicey to read much into housing activity in the middle of winter, even a flash of strength on this front could revive bad memories for the Bank of last spring’s surprising snap-back in home sales and prices,” he wrote.

The Bank will be viewing sales activity with great interest in the opening months of this year, Porter said, as it weighs up whether the economy has cooled sufficiently to open the door for a rate drop. “Activity is still quiet, but even a hint of a firmer demand/supply balance amid pending rate cuts could readily fire the sector back up again.”

Wage growth, meanwhile, continued at a noteworthy clip in December, coming in at 5.8% for the month despite a higher unemployment rate on a year-over-year basis.

Still, “mixed” labour market data provided just enough indication that the economy was still soft in the fourth quarter, according to Royal Bank of Canada (RBC) assistant chief economist Nathan Janzen.

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