Home sales dropped in January as tariff uncertainty grew, while a record rise in new listings increased supply
According to the Canadian Real Estate Association (CREA), uncertainty about tariffs and a potential trade war with the United States slowed Canadian home sales at the end of January.
Financial Post reports that the national sales declined 3.3 percent from December, while newly listed properties jumped 11 percent, marking the largest seasonally adjusted increase in new supply since the late 1980s, aside from swings during the COVID-19 pandemic.
CREA senior economist Shaun Cathcart linked the sudden drop in demand to economic uncertainty, stating, “The timing of that change in demand leaves little doubt as to the cause—uncertainty around tariffs.”
He noted that the increased supply created softer pricing conditions, particularly in British Columbia and Ontario, where markets had been tightening since last fall.
The national average home price increased 1.1 percent year over year to $670,064 in January.
However, CREA noted that the National Composite MLS Home Price Index has “barely budged” over the past year due to “ongoing softness” in Ontario and British Columbia.
Rising prices in Quebec, the Prairies, and the East Coast helped offset declines in those two provinces.
British Columbia and Ontario remained Canada’s most expensive housing markets, but prices dropped 3.8 percent and 6.2 percent, respectively, from December to January.
Meanwhile, Quebec saw prices climb 7.3 percent. The Prairie provinces recorded smaller price increases, with Alberta up 0.4 percent, Saskatchewan up 0.7 percent, and Manitoba up 0.3 percent.
Newfoundland and Labrador led the Atlantic provinces with a 5.8 percent increase in home prices in January.
At the end of January, national inventory stood at 4.2 months, keeping the market between a buyer’s and seller’s market. The long-term average is five months.
CREA explained that, “Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months and a buyer’s market would be above 6.5 months.”
The increase in new listings pushed the national sales-to-new listings ratio down to 49.3 percent. CREA stated that this places it on the lower end of the 45 percent to 65 percent range considered balanced.
The number of properties listed for sale across Canadian MLS systems increased 12.7 percent year over year, reaching nearly 136,000 in January. However, CREA noted that this remains below the long-term average of 160,000 for this time of year.
CREA chair James Mabey expects real estate activity to increase in the spring but cautioned that trade tensions could affect the sector.
“The threat of a trade war with Canada’s largest trading partner is a major dark cloud on the horizon,” he said, warning of broader economic impacts.
Despite uncertainty, lower interest rates and softening prices could benefit some buyers.
The Bank of Canada lowered its policy interest rate by 25 basis points to 3 percent on January 29, marking its first rate cut of 2025. Analysts anticipate further reductions throughout the year.
Mabey acknowledged that economic conditions remain uncertain but noted that some buyers may take advantage of changing conditions.
“While uncertainty about the economy and jobs will no doubt keep some prospective buyers on the sidelines, a softer pricing environment alongside lower interest rates will be an opportunity for others,” he said.
