It’s Not Just Politics… Other Expenses Keeping Canadians Away From Spending on Housing

Canadian households entered 2026 still spending, but they pulled back on the parts of the economy tied most closely to the housing market.

TD Economics’ latest card‑spending report showed that overall consumer outlays softened in January before stabilizing in February, with real spending in the first quarter tracking at about a 1.2% annualized pace.

However, the sharpest weakness sat in categories linked to homeownership and renovation, adding another headwind for brokers counting on a spring housing rebound.

Housing‑linked purchases lost momentum

“Outlays at furniture stores, home centres, and building materials retailers have declined for two consecutive months,” TD economist Maria Solovieva said, noting that spending in those categories was down 2.1% year‑over‑year in February.

She added that this pattern was “consistent with the cooling in Canada’s housing market – national home sales are tracking more than 5% lower relative to a year ago in Q1,” based on early data.

Solovieva said the broader consumer landscape remained “resilient but increasingly battle‑worn,” with essential goods holding up while “discretionary goods categories – particularly those tied to housing – are losing momentum.”

“Canadian households continue to fight one battle after another, with no intermission in sight,” she said.

Home sales slowdown met a still‑tight budget

Data from the Canadian Real Estate Association (CREA) showed national home resales fell 1.3% month over month following January’s 5.8% decline.

“February saw a continuation of the quieter levels of activity recorded in January, although there was some indication things were starting to pick up speed toward the end of the month,” CREA senior economist Shaun Cathcart said.

At the same time, TD’s spending data suggested that households channelled more of their budgets into necessities.

Over the past three months, grocery, convenience and general‑merchandise stores collectively accounted for about 70% of goods‑spending growth, compared with 40% a year earlier, while clothing and electronics “effectively fallen away,” Solovieva said.

Higher‑income households still appeared willing to spend on services. Travel outlays were up almost 10% year‑over‑year and recreation spending rebounded in February, according to TD. But Solovieva warned that rising fuel costs and market volatility from the Middle East conflict could weaken that support.