U.S. Midterms, a Rate Hike and the End of the HST Rebate: What It Means for Ontario Real Estate

It's been a busy couple of weeks for anyone watching the housing market. Americans voted in their midterm elections on November 3, the Bank of Canada raised rates for the first time in three years, and Ontario confirmed the end date for HST relief on new homes. Here's how those three stories connect, and what they could mean for buyers and sellers in Markham, Stouffville, Uxbridge and Toronto.

What happened south of the border. Democrats won control of both the U.S. House and Senate. Markets here reacted quickly: the TSX jumped close to 500 points the next morning and the Canadian dollar climbed to a seven-week high. Some Canadian officials close to trade talks believe the result strengthens Canada's hand in negotiations over steel, aluminum, autos and lumber tariffs.

But the tariffs haven't gone anywhere yet. The new Congress doesn't take office until January, and most of the tariffs on Canada sit under trade powers the President controls directly. Even if Congress passes a bill to roll them back, the President can veto it, and Democrats don't hold a large enough Senate majority to override that easily. Ottawa says its strategy of diversifying trade won't change because of the vote.

Why that matters for homes here. Two links matter most. First, jobs and confidence: auto and manufacturing towns like Oshawa sit right next door to our Durham and York Region markets, and how those workers feel about their job security shows up in local buying decisions. Second, building costs: tariffs on lumber, steel and other materials affect what builders pay, and that feeds into new-home prices. There is a small silver lining, since CMHC has noted that Canadian lumber that's harder to sell into the U.S. may stay here, which could ease some homebuilding costs over time.

Rates are moving the other way. On October 28, the Bank of Canada raised its policy rate by a quarter point to 2.50%, its first increase since July 2023, mainly because higher energy prices have pushed inflation up. Most big-bank prime rates rose to 4.70%. If you have a variable-rate mortgage or a home equity line of credit, your payment has likely already gone up. The next decision is December 9, and that will tell us whether October was a one-time move or the start of a trend.

The HST rebate on new homes has a firm end date. Since April 1, 2026, buyers of newly built homes in Ontario have been able to get back the full 13% HST on homes up to $1 million, worth up to $130,000. Full relief continues up to $1.5 million, then shrinks on homes priced up to $1.85 million. It isn't limited to first-time buyers, and it has worked: new single-family home sales in the second quarter jumped from about 2,600 to more than 7,200 compared with a year earlier.

That window closes for agreements signed after March 31, 2027. The province's October 29 Fall Economic Statement confirmed something many buyers may not realize. When the enhanced rebate ends, Ontario is also eliminating its original New Housing Rebate of up to $24,000, which has existed since the HST arrived in 2010. Repeat buyers won't fall back to the old $24,000 rebate. They'll get none at all on new builds. The rental property rebate used by investors is ending too.

A few important details:

• First-time buyers are protected. Separate federal and Ontario first-time buyer programs still remove the full HST on qualifying new homes up to $1 million.
• Signing date is what counts. If you sign with a builder by March 31, 2027, you keep access to the rebate as long as the deal closes by the end of 2035.
• Resale homes aren't affected. HST generally applies only to new construction, so these changes don't touch the purchase of an existing home.
• The Ontario Real Estate Association has asked the province to extend the deadline, so it's worth watching for any change.

What this could mean for the market ahead. Expect a rush of new-build and pre-construction signings through the winter as repeat buyers try to lock in before March 31. After that date, a move-up buyer could be looking at tens of thousands of dollars more in tax on a new build than on a comparable resale home, which may make resale houses in established neighbourhoods more attractive. Builders may slow new project launches once the incentive disappears, and higher rates add pressure on everyone carrying a mortgage. Meanwhile, any thaw in Canada–U.S. trade would help confidence, but it's unlikely to show up quickly.

What this means for you: If you're a repeat buyer considering a new build, the next five months matter, and the signing date is the deadline to watch. If you're selling a resale home, the end of the rebate could work in your favour next spring. And if you have a variable-rate mortgage or a renewal coming up, it's worth reviewing your options before the December 9 rate decision.

This post is general information, not tax, legal or financial advice. Rebate eligibility depends on your specific purchase, so confirm the details with your builder, lawyer or accountant. Contact the Powell & Gallop Team if you'd like to talk through how any of this affects your plans.

Sources: CTV News — How the U.S. midterm results could affect Canada · CTV News — What do the results mean for Canada? · BNN Bloomberg — Canada braces for Trump fallout · HKC Construction — 2026 U.S. Midterm Results: What They Mean for Canada · True North Mortgage — Mortgage Rate Forecast · Ontario Newsroom — Expanding HST Rebate · Ontario 2026 Fall Statement — Annex · Canadian Mortgage Trends — Ontario details phaseout of $24,000 HST rebate · Now Toronto — Ontario home sales surge after HST rebate · OREA statement on the Fall Economic Statement