Here's a look at what's going on with Canadian housing markets.
How will tariffs and interest rates impact Canada's home prices? What places in Canada can offer better affordability? It is a buyer's market? Read on for some answers.
According to CREA, May's national home sales were up 3.6% from last month — but down 4.3% compared to May 2024. So is that good or bad?
The 3.6% bump is seasonally adjusted, a statistical tool designed to smooth out expected changes, like the usual spring market rush. But the actual sales numbers, the ones that show how many homes really changed hands, were lower than a year ago, in what’s typically one of the busiest months of the year.
In other words, the market looked stronger on paper than it felt on the (housing) ground. U.S. trade mayhem has dampened homeowner expectations so far this spring, despite a 2.25% drop in prime interest rates since June 2024.
May's sales data is an improvement from the month before, and the best since November 2024. Is it a trend or a one-off? CREA is crossing its fingers that it's the start of an upward trend.
Next CREA update on July 15, 2025.
$701,800 in May 2025 (a decline of 0.1% m/m from April's $702,200)
This stat logged a decline of 3.5% year-over-year and was lower by 18.0% from the $855,800 peak MLS®HPI recorded in March 2022.
(as per MLS® HPI Aggregate Composite Benchmark, not seasonally adjusted)
Trade and Trump disruption are making their way through our economy — likely keeping the Canadian housing market tempered for a few more months, even if interest rates start to drop again.
According to a recent survey by Royal LePage, 49% of prospective home buyers have put their plans on hold due to the U.S. trade dispute.
Economic uncertainty is dampening this year's expectations for a housing resurgence, which was anticipated with the lowered mortgage rates compared to 2024.
That said, many home buyers and sellers had already been waiting on the sidelines, so how much longer are they willing to wait? We already see pockets of activity or home-price increases across this great, very Canadian land in areas not strongly affected by trade turmoil.
And if you can buy, you may find a deal in areas where homes languish longer on the list.
We're at a crossroads as the year ticks on: markets could change quickly if a U.S. trade deal knocks tariffs off their higher perch and a housing surge ensures, or increasing unemployment could keep many holding on longer for another tepid housing year.
If the central bank cuts rates again, more may decide to get off the bench. In the meantime, housing market experts are looking for the uncertainty to wind down and
Read on for what some housing experts are expecting this year.
“In short order, we’ve gone from a slam dunk rebound year to treading water at best.”
– Shaun Cathcart, CREA Senior Economist, quoted in the Financial Post, Apr. 15, 2025
Without policy movement, housing prices and sales may remain weak through 2026, risking further declines, especially as mortgage renewals intensify
Housing experts and economists are concerned about the trajectory of Canada's housing market, and are looking to even lower interest rates as a potential cure — calling for a drop to at least the low end of the neutral range of 2.25%.
"There is a risk that prices will continue to decline unless the Bank [of Canada] cuts interest rates much further than we currently forecast," (Brown and Chambers, Capital Economics Ltd., Financial Post, Apr. 16, 2025).
Are housing forecasts for real, or are they 'Pin the Tail on the House Donkey' in predicting where home prices might go?
Housing experts can differ widely on what's happening with our housing markets. That's partly due to Canada's size, with regional differences often skewing the big 'housing landscape' picture (for example, Vancouver and Toronto's outsized and outlandish prices and housing demand). And, stat sources can differ, especially if using 'in-house' numbers.
At the end of 2025, we'll break out the sparklers and compare the predictions with the actual results (when they come in) to see who pinned it right.
Tight home affordability in Canada has backed off a bit in the last few months as fixed mortgage rates and home prices cool slightly. However, home prices in Canada are still the highest of the G7 countries (led by the major city centres of Vancouver and Toronto).
Here's what may help keep price growth in check to either deter demand or increase supply:
In 2023, we saw a whopping 46% increase in Canadian newbies waving the red maple leaf. The federal government curbed immigration in 2024, and the temporary resident outflow reached over 660K. Increased tightening and outflow are expected to continue for 2025 and beyond.
Still, our rapid population growth over the past few years, combined with not enough housing starts to keep pace, continues to put forward pressure on Canada's housing supply, which might send home prices up, not down. Not to mention all the first-time buyers who are looking for a chance to enter the market.
Factors that could affect the pace of home building:
Federal, provincial, and city governments are furiously trying to clear the road to increase starts or increase the incentive to increase starts.
NIMBYism (not in my backyard) is another major obstacle to slapping up multi-dwelling housing in existing neighbourhoods that would ease the strain. (Calgary and Edmonton seem to have less trouble getting shovels in the dirt — both these cities have led national starts for months now.)
Many forces in Canada seem to be at odds, interfering with the pace of the Canadian housing inventory needed to keep up with current and future needs. We're not talking here about housing for low-income needs, which is also very urgent and essential — we're talking about enough housing to meet the general demands of an existing and growing population.
Canada is down by over 5 million homes needed by 2030 (on top of annual construction). The lack of inventory won't help stabilize home prices unless reasonably addressed in the coming years.
Typically, lowering interest rates attracts buyers and stokes housing demand. But this time around, a brand new trade war with the U.S. is already sending shockwaves through economic channels that may further spook buyers. Despite lower rates, it has the potential to reduce demand compared to the original forecast for 2025.
However, home affordability is currently (still) at an all-time low in Canada. Home prices are down only about 17% from the 45% peak of March 2022, and rent and other prices are elevated, making it harder for home buyers to save enough down payment.
Will demand be reduced enough to bring home prices down? It remains to be seen whether a potential recession from trade disruption would continue to dissuade home buyers.
Beyond that, enough sellers would have to list to create a balanced market (in the short-term) in a low-interest-rate environment.
Home prices are seen through the eyes of the beholder. Many new buyers want prices to decrease to better afford a home, but sellers want them to stay higher (for obvious equity reasons).
According to National Bank stats, mortgage affordability improved again in Q1 2025, with lower mortgage rates and higher income seeing 8 of 10 Canadian centres ease:
Use our great calculator below for an idea, then give us a shout for your numbers.
May 2025 — The three Canadian centres with the highest average MLS® home prices are:
Based on the MLS®HPI Composite Benchmark (not seasonally adjusted)
May 2025 — The six Canadian centres with the lowest average MLS® home price.
We're not saying you should (or could) move there, but you can dream about how much home you'd get for the price.
Based on the MLS®HPI Composite Benchmark (not seasonally adjusted)
BALANCED – The national SNLR (sales to new listing ratio) in May was unchanged at 47.0% (from 46.8% last month).
New supply and sales activity cancelled each other out to maintain a balanced national market. However, the month saw more overall sellers and buyers, with CREA suggesting the trend may carry forward another month.
A few other details:
Why is the Canadian market balanced? Despite prime rates being lower by about 2.25%, overall housing activity in 2025 has been subdued so far due to economic uncertainty stemming from the U.S. trade war, resulting in lower demand and increased inventory compared to 2024.
Market disparity? Always. Regardless of national or even provincial sales and listing averages, Canada is a big country (area-wise), and home shoppers and sellers can find very different market conditions depending on where they're buying or selling.
According to CREA (Canadian Real Estate Association), a strong buyer's market is when the sales-to-new-listings ratio (SNLR) is 45% or below.
At that ratio percentage, there are typically more properties for sale than buyers, offering more choice and bargaining power — especially in placing purchase offers with conditions that protect a buyer's rights and finances.
When the SNLR falls between 45% and 65%, market conditions are considered 'balanced' in buyer demand, available listings, and sales levels. This state helps to keep prices relatively stable, allowing reasonable purchase and sale terms.
The middle ground of housing competition — balanced markets can lean more towards the buyer's or seller's spectrum. And despite any prevailing national or local trends, a particular house, street or area can defy it (you know who you are).
An SNLR of 65% or higher is a market that strongly favours the seller.
In a seller's market, there are more buyers than sellers, and the properties sell quickly and at higher prices, giving the seller more power to set their price and terms of sale.
When the demand for housing exceeds supply, buyers often resort to a gamut of strategies to snap up a house before others, such as engaging in bidding wars or feeling pressured to place no-condition offers.
This graphic offers a provincial snapshot of prices in Q1 2025 compared to 1 year, 3 years, and 5 years ago.
As you can see, most home prices in Canada have increased over the past 5 years.
Want an even more interesting stat? The average Canadian MLS®HPI composite benchmark home price has risen more than 200% since 2005 (over 20 years)!
Here are a few multi-numbered sources to keep you busy and in the know:
Our friendly, highly trained brokers can help you get the best rate and better mortgage options, saving you thousands.
We can also offer unbiased advice for first-time and next-time buyers for affordability strategies that may make the difference in owning and keeping a home in Canada.
Make sure to ask about features such as portability, free payment frequency changes and mortgage recasting, as well as products like Purchase + Improvements when looking to buy your next home.
Are your mortgage details more complex? We have the flexibility to help customize a short-term solution. Get in touch with your expert broker here.
Continually updated. Where rates may go now and later — and what’s driving them.
Know before you go (house hunting, that is). Get pre-approved fast, hold your best rate.
You have to be able to handle higher payments as a buffer for affordability.
