The New Housing Price Index (NHPI) for Canada fell by 0.1% in July, a slight improvement from the 0.2% drop in June. This index measures the prices of newly built residential homes based on agreements between builders and buyers. Prices are collected from builders without including value-added taxes like the federal goods and services tax and the provincial harmonized sales tax. The survey includes new single-family homes, semi-detached homes, and townhomes.

The NHPI Data Coverage

The NHPI offers data for the whole country and individual provinces, as well as details for 27 major urban areas. The data is not adjusted for seasonal changes, meaning it remains consistent from one reporting period to the next, without revisions. The NHPI data for July 2025, which shows a small decline of -0.1%, suggests the market is stabilizing rather than bouncing back. This small drop does not alter the overall outlook for traders in the upcoming weeks. The main influence remains the Bank of Canada’s policy rate, which has been high since the aggressive hikes in 2023. This housing data indicates that the Bank of Canada is likely to maintain its current stance at the next meeting. July 2025 inflation data shows the Consumer Price Index (CPI) remains high at 2.9%, well above the 2% target. Therefore, policymakers have little reason to lower rates based on a slightly improved housing figure. We anticipate that short-term interest rate derivatives, like BAX futures, will remain steady, with low chances of a rate change soon.

Impact on Markets and Trading Strategy

For currency traders, this supports a neutral view on the Canadian dollar. The USD/CAD exchange rate will likely respond more to actions from the U.S. Federal Reserve or changes in global risk sentiment than to minor Canadian housing data. We wouldn’t suggest making new bets on the CAD based on this information, as the interest rate difference between Canada and the U.S. is not expected to change. In the equity options market, this slightly improved data may lessen some of the risks priced into Canadian bank stocks and real estate investment trusts (REITs). After a significant drop in national home sales over the last two years, any sign of stability is a positive for lenders and property owners. We might think about selling out-of-the-money puts on these sectors to earn premium, expecting that the worst of the housing correction is behind us. Overall, the plan for the upcoming weeks should be patience, as this data indicates a continuing economic slowdown instead of a new trend. The market is showing signs of stabilization following the rise in borrowing costs, which aligns with recent Statistics Canada data showing the national unemployment rate has risen to 6.3%. We see better opportunities in selling volatility rather than buying directional trades, as the central bank seems to be in a holding pattern. Create your live VT Markets account and start trading now.

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