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    Canada’s annual new housing price index fell to -2.3% from -2% in January, signaling weakness

    by VT Markets
    /
    Feb 19, 2026
    Canada’s New Housing Price Index fell 2.3% year over year in January. That was worse than the 2.0% decline in the prior reading. The data show that new home prices were still lower than a year earlier. The pace of the drop increased by 0.3 percentage points from the previous report. January’s 2.3% year-over-year decline points to growing weakness in housing. Because this is a bigger drop than December’s 2.0%, it suggests the downturn may be picking up speed. We should prepare for the wider economic effects in the weeks ahead. This report raises the chances that the Bank of Canada will cut interest rates earlier than markets expect. It will be hard for the central bank to overlook housing as a drag on growth, especially with inflation easing to 2.7%. We should consider interest-rate derivatives that benefit from falling rates, such as call options on Canadian bond futures. A more dovish Bank of Canada would likely pressure the Canadian dollar. With the loonie already struggling to stay above 0.7300 versus the U.S. dollar, weaker housing data adds to the downside risk. One way to express this view is to buy put options on the Canadian dollar, aiming to profit if it falls against the U.S. dollar. Canada’s major banks have large mortgage portfolios, so they are closely tied to housing. As seen in 2025, when delinquency rates began to rise, falling home prices can hurt bank profitability and stability. Buying put options on a Canadian financials ETF is a direct way to hedge this risk, or potentially profit from it. The housing correction that began in late 2024 and worsened through 2025 was driven by high interest rates. This new report suggests that weakness is continuing into 2026, which could lift overall market volatility. We can also use options to target bigger price swings in the broader TSX 60 index.

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