Forecasting home prices and market trends from 2025 to 2027.
How might tariffs and interest rates impact Canada's home prices? What places in Canada can offer better affordability? It is a finally a buyer's market? Here's a look at the latest trends and what they may signal.
According to CREA's latest report, the national housing market in July 2025 continued tepid momentum, with home sales up (mainly driven by a surge in activity in the Greater Toronto Area), and home prices and new listings remaining relatively flat compared to June.
The ongoing U.S. trade tensions have been a drag on Canadian housing markets this year, despite the prime rate being 2.25% lower than it was in June 2024. Rather than a typical spring rush, activity seems to be picking up into the summer — some homebuyers can't wait forever, and others may be looking for a deal.
Will the market improvement continue heading into the fall? An expected increase in September listings could help meet that demand to keep home prices stable.
Next CREA update on September 15, 2025
$693,300 in July 2025 (a decline of 0.7% m/m from June's $698,000)
This stat logged a decline of 3.4% year-over-year and was lower by 19% from the $855,800 peak MLS®HPI recorded in March 2022.
(as per MLS® HPI Aggregate Composite Benchmark, not seasonally adjusted)
Buzz is building for a rate drop this fall — which may spur housing activity months after an expected spring rush didn't take root.
Many home buyers and sellers have been on the sidelines, waiting for some financial and economic clarity after Trump took a wrecking ball to the Canada–U.S. trade relationship.
However, as Fall 2025 approaches, housing markets may experience more heat even as outdoor temperatures cool. If inflation holds steady, some economists predict another Bank of Canada interest rate drop as soon as September, which could be the catalyst that compels more Canadians to make their move (literally).
Housing market analysts and realtors are hoping for any bump to finish out 2025 better than it started — though ongoing trade uncertainty is likely to keep a lid on a housing recovery in the 2nd half of the year.
Read on for what some housing experts are expecting this year and beyond.
“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
Housing experts and economists are concerned about the trajectory of Canada's housing market and are looking to lower interest rates as a potential cure — calling for a drop to at least the low end of the neutral range, to 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 could still send home prices upwards, not downwards. Not to mention all the first-time buyers who are looking for a chance to enter the market, which if affordability improves, could add to supply strain.
Factors that might 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 (or so they say).
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 recently reduced legislation to allow more multi-family buildings within established neighbourhoods, and have led national starts for months now.
Several forces in Canada appear to be at odds, hindering the pace of the Canadian housing inventory needed to meet 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.
Mobile, manufactured, and modular home building can help reduce the time of a home being move-in ready on real (owned by you) property. However, many city centres would need to reduce or change local zoning and bylaws to allow more of these home types to be installed in urban residential neighbourhoods.
Read more here: How Mortgages Work for Prefabricated Homes
Typically, lowering interest rates attracts buyers and stokes housing demand. But this time around, a brand new trade war with the U.S. is sending shockwaves through economic channels and spooking 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 the all-time worst in Canada. Home prices are down only about 18% 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 so they can 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:
BMO's economist, Robert Kavcic, recently spoke in The Globe and Mail about the positive direction he sees home affordability heading in Canada:
Use our great calculator below for an idea, then give us a shout for your numbers.
July 2025 — The three Canadian centres with the highest average MLS® home prices are:
Based on the MLS®HPI Composite Benchmark (not seasonally adjusted)
July 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 July rose to 52% (from 50.1% last month).
New supply dropped and sales increased to push up the national ratio, still in balanced market territory. Compared to July 2024, all property listings were up 10.1% and in line with the long-term average for that time of year.
A few other details:
Why is the Canadian market balanced? Overall housing activity in 2025 has been subdued so far due to economic uncertainty stemming from the U.S. trade war. Inventory levels are higher than in 2024, with sufficient demand (sales) to maintain a balanced national market heading into the fall.
Is there market disparity in Canada? 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 Q2 2025 compared to 1 year, 3 years, and 5 years ago.
As you can see, home prices in most provinces across Canada have increased over the past 5 years — though BC and ON, considered the most expensive markets, have seen recent declines.
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:
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You have to be able to handle higher payments as a buffer for affordability.
