Canadian housing market ends 2025 on chilly note, sales to rise 5% this year

This time last January, experts were forecasting a boom year for the Canadian housing market. Interest rates had finally started to come down after a prolonged hold, providing sorely-needed relief for mortgage borrowers. A number of new policies aimed at helping first-time buyers get into the market had also been announced, such as an expanded price cap for insured mortgages and longer amortizations. Combined, these were expected to herald in the many buyers who had put off their home purchases.

But in the face of unprecedented economic uncertainty, sweeping market recovery never materialized. US tariff threats severely undermined buyers’ confidence, especially in the first half of the year. It was months later – and after several central bank interest rate cuts – that buyers began to tentatively return.

That resulted in a roughly flat year for national home sales; according to the Canadian Real Estate Association (CREA), a total of 470,314 properties traded hands over the course of 2025, marking a -1.9% decrease from 2024. The year also ended with a glut of inventory with 133,495 properties available for sale at the end of 2025, up 7.4% from the same time in 2024. However, that remains 9.9% below the long-term average for the month, and overall inventory has steadily dropped since May, given the mid-year sales rally. 

2026 to be stronger year, says CREA

Overall, the association firmly believes activity will continue to improve this year, pointing to the fact that sales had recovered by 12% by August. A buildup of sidelined buyers, and lower interest rates will carry the trend forward.

“The year was characterized by a tariff -induced flight of buyers back to the sidelines in the first quarter, followed by a decent sales rally mid -year, and a bit of a stall to finish off 2025,” states CREA’s annual recap. 

“While this slowed into more of a holding pattern to finish the year, it’s that mid-year upward trend that is expected to pick up once again in 2026,” states the association’s release. A major factor underpinning this forecast for higher activity in 2026 is pent-up demand, particularly from first-time buyers, many of whom have been shut out of the market over the past four years.”

Anticipated rate hold could spur buyers to act now

While affordability conditions remain steep for buyers in many markets – in particular, British Columbia and southern Ontario – a series of central bank rate cuts, that brought the benchmark borrowing rate down from 5% to 2.25%, has helped ease conditions for borrowers.

But those rate cuts are now in the rearview; the Bank of Canada has indicated that it will hold its benchmark rate for the foreseeable future. Borrowers who have been waiting for rates to bottom may now feel incentivized to act, as neither fixed or variable mortgage rates appear poised to lower further.

Whether the supply of homes – which built up considerably in 2026 - remains ample will also be a factor in price growth. First-time buyers could be the homes to move the dial here – should they come to the market in large numbers, they’ll deplete the number of available listings without adding more back to the market, as resale buyers and sellers tend to do. This would tighten market conditions back up.

2026 sales to rise by 5.1%

Overall, CREA anticipates national home sales to come in 5.1% higher this year than last, with a total of 494,512 transactions. Sales pickup would be concentrated the most in BC and Ontario – forecasted to rise by 8% – given the availability of supply. Other provinces that have seen sustained demand through 2025 will experience less of an improvement.

Home prices will also tick up slightly to an average of $698,881 (2.8%), says CREA. However, price growth will remain muted in the most expensive markets such as Ontario and BC, and in Alberta and Nova Scotia, where sales have cooled. Saskatchewan, Quebec, and Newfoundland and Labrador, however, will continue to see prices rise, though a drop in population growth will see those gains soften to roughly 3 - 6%, compared to 6 -8% this year.

The market is then forecast to recover further in 2027, with sales up another 3.5%, and the national home price up by 2.3%, to $714,991 – the seventh consecutive year the average national price has remained close to the $700,000-mark.

2025 ends with soft sales, flat price growth

However, signs of this anticipated recovery have yet to make themselves known – December 2025 home sales remained soft, putting a cap on what had been a sluggish winter sales season. A total of 26,077 homes sold, down 2.7% from November, and 4.5% annually.

That outpaced a slight 2% dip in new listings, easing overall market conditions. The sales-to-new-listings ratio (SNLR) – a measure that CREA uses to gauge overall market competition – fell to 52.3% compared to 52.7% in November. Generally, a ratio between 45 - 65% indicates a balanced marketplace.

That kept a firm lid on price growth, with the national average coming in at $673,335 in December, down 0.1% year over year. The MLS Home price index, which measures the cost of the most typical home sold, dipped 0.3% from November, and was down 4% from 2024.

CREA points out that the price drop from November could reflect motivated sellers lowering their prices to get homes sold before the holiday season. Most of the price drops were concentrated in Ontario’s Greater Golden Horseshoe region, with the largest declines in the condo and townhome segment; two-storey detached homes largely held onto their value.

​​Shaun Cathcart, Senior Economic at CREA, says not to put too much stock in the end-of-year downturn, as underlying trends point to a warmer spring.

“There doesn’t appear to have been much rhyme or reason to the month - over-month decline in home sales in December, which was simply the result of coincident but seemingly unrelated slowdowns in Vancouver, Calgary, Edmonton, and Montreal,” he states.

“For that reason, it would be prudent for market observers to resist the temptation to trace a line from the end of 2025 into 2026. Rather, we continue to expect sales to move higher again as we get closer to the spring, rejoining the upward trend that was observed throughout the spring, summer, and early fall of last year.”

The next CREA release is scheduled for February 18, 2026.

Also read:

• What can mortgage borrowers expect in 2026?
• Toronto home sales hit a 25-year low in 2025
• Bank of Canada holds interest rate at 2.25% in December announcement