09:10 AM EST, 11/18/2024 (MT Newswires) -- The progress on interest rates over the past few months is starting to be felt in the Canadian economy, said TD.

September's fairly strong increase in existing home sales was more than repeated in October, where home sales spiked up 7.7% month over month in October after trending significantly lower for most of the year, noted the bank. The relief households have received from lower interest rates is starting to return activity to this market, but it isn't yet charging full steam ahead.

Despite the uptick in sales, prices aren't building rapidly, and the sales-to-new-listings ratio remains well below its pandemic-era peak, stated TD. The Canadian provinces with the greatest affordability challenges, Ontario, and, to a somewhat lesser extent, British Columbia, still see supply-demand conditions that favor buyers, and that should continue to temper price growth in the near-term, while sales continue to get a lift from lower interest rates.

This week's data calendar is a bit more action-packed and will bring TD's view of Canadian data back into wide focus. Canada has housing starts early in the week, which should shed additional light on how lower interest rates are passing into the economy, and later in the week retail sales to check in on the consumer.

The headliner is October's inflation data, out on Tuesday, which is a critical data point for the Bank of Canada's policy decision next month. This should help paint a clearer picture of what the BoC will do at its Dec. 11 policy meeting, though at the moment, TD thinks signs point to a 25bps cut.