Canada Housing Market Sees Annual Sales Decline in 2025 Amid Economic Headwinds

Canada’s housing market saw annual home sales decline in 2025, according to data from the Canadian Real Estate Association, as economic pressures including U.S. tariffs and softening demand weighed on buyer activity and market momentum.

Overall, total residential sales across Canadian multiple listing systems dropped by around 1.9 per cent compared with 2024, with roughly 470,000 units traded throughout the year. The downturn reflected a slowdown late in the year, with December activity falling 2.7 per cent versus November and about 4.5 per cent lower than the same month a year earlier.

Experts say the economic shock from tariffs imposed by the United States early in the year dampened buyer confidence and discouraged some transactions in key markets. Cities such as Vancouver, Calgary, Edmonton and Montreal all showed signs of slowing activity in the final months of 2025, contributing to the national decline.

Alongside weaker sales, the Home Price Index edged down modestly, and newly listed properties also decreased for several consecutive months, which slightly eased the national sales-to-new-listings ratio toward its long-term average.

Despite the annual drop, many analysts point to seasonal trends and expected spring demand as potential catalysts for market recovery in 2026. Historically, housing activity tends to pickup in the spring as weather improves and more buyers and sellers return to the market.

The Bank of Canada’s interest rate cuts — which brought the benchmark rate down to 2.25 per cent by the end of 2025 — have also eased borrowing costs, creating some optimism that affordability pressures could moderate and support increased home sales.

The national housing market remains in a transitional phase, with buyers and sellers adjusting to changing economic conditions and price dynamics. Further monitoring of mortgage rates, inventory levels, and economic sentiment will be key to understanding the market’s direction throughout 2026.