Canada’s residential real estate market finished 2025 in a subdued state, with national home sales retreating and affordability continuing to constrain buyer activity. According to the Canadian Real Estate Association (CREA), transactions recorded through MLS systems totalled 470,314 units for the year, representing roughly a 1.9 % decline compared with 2024.
Sales Slow and Market Activity Eases
December 2025 saw sales soften further, with national home sales down by 2.7 % month over month in seasonally adjusted terms. The number of properties newly listed also declined, contributing to a sales to new listings ratio that remained close to the long-term average This is a signal that overall market conditions were relatively balanced but still weak.
CREA’s Home Price Index (HPI) dipped in late 2025, with prices trending lower in key urban markets such as Ontario’s Greater Golden Horseshoe region. The national composite HPI showed a 0.3 % decline from November to December, reflecting some sellers’ willingness to adjust prices to attract buyers before the end of the year.
Persistent Affordability Challenges
Despite multiple interest rate cuts by the Bank of Canada in 2025, intended to stimulate economic activity and improve affordability, high prices and economic uncertainty continued to keep many potential buyers on the sidelines. Weak sales across much of the country were coupled with regional variation, while some smaller centres demonstrated resilience, larger markets such as Vancouver and Toronto saw more pronounced softness.
CREA’s data also showed that total listings were up on a year over year basis, but still below long term averages, suggesting that inventory dynamics remained uneven across provinces and cities.
Broader Context: A Market in Transition
The Canadian housing slowdown in 2025 reflects a broader period of adjustment after years of rapid price growth and historically tight markets. In several months of 2025, home sales hit multi-year lows, as potential buyers responded cautiously to lingering economic uncertainty and mortgage affordability pressures. Economic headwinds, including weaker business investment and slower GDP growth have also coincided with housing market adjustments, affecting buyer confidence and transaction levels.
Economic commentators note that while the period of rapid escalation in prices and activity has passed, the housing market may be entering a more balanced phase, with both buyers and sellers adapting to new financing conditions and broader macroeconomic trends.
Looking Ahead to 2026
CREA and other analysts project that housing sales could rebound modestly in 2026 as buying conditions improve with lower mortgage rates and seasonal spring market momentum. However, the total number of transactions is expected to remain below historical averages, and many markets will continue experiencing affordability constraints.
Increasing supply, including higher levels of housing starts in some regions and regional variation in price dynamics will likely shape the pace and geographic distribution of any recovery. Policy measures aimed at boosting construction, improving affordability, and addressing supply-demand imbalances may also influence housing trends in the year ahead.
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Written for the Canadian Chamber of Commerce in Hungary News Section as part of our ongoing coverage of developments affecting Canadian trade, economy and international partnerships, January 2026