National home sales in Canada dropped by 1.9% in December compared to the same period the previous year, as reported by the Canadian Real Estate Association (CREA) on Wednesday. This decline marked the culmination of a year characterized by lower interest rates but increased economic concerns.
Certain Canadian markets experienced restrained buyer activity in 2025 due to heightened unemployment rates and apprehensions stemming from the U.S. trade conflict. However, markets such as St. John’s, Regina, and Quebec City witnessed significant boosts in both activity and prices. Quebec City saw a remarkable 17% surge in prices year-over-year following the Bank of Canada’s decision to reduce its key interest rate by a full percentage point in 2025.
Shaun Cathcart, senior economist at CREA, projected a modest 5.1% sales increase for 2026 but emphasized that affordability and limited supply continue to pose challenges in many regions across the country. The anticipated rise in sales is expected to be driven mainly by southern Ontario and British Columbia, which faced struggles in the previous year.
While some regions saw a decline in home sales in December, with Toronto experiencing its lowest level of sales since 2000 and Vancouver notching figures reminiscent of the 2008 financial crisis, the housing market in Toronto is anticipated to persist in a slow trend in 2026. John Pasalis, president and broker at Realosophy Realty, indicated that economic uncertainties, particularly related to the U.S. trade war, could impede a significant rebound in the housing market.
In markets like southern Ontario and parts of British Columbia, an influx of new listings has led to a cooling effect, resulting in downward pressure on home prices. For instance, Hamilton saw its slowest home sales in December since 2010, dropping by 12% year-over-year.
Robert Hogue, assistant chief economist at RBC, highlighted the abundance of inventory in certain markets, reducing the urgency for buyers to make quick decisions. Despite the slowdown in some regions, stability and even strong activity have been observed in areas like Quebec, the Atlantic provinces, and the Prairies.
Looking ahead, Hogue emphasized that the housing market’s trajectory will be influenced by the performance of the Canadian economy. Factors such as improvements in the labor market could bolster demand and stabilize prices. However, continued economic uncertainties, trade concerns, and questions regarding labor market recovery are expected to keep market direction uncertain in the near term.