National home sales in Canada dropped by 1.9% in December compared to the same month a year ago, as reported by the Canadian Real Estate Association (CREA) on Wednesday. This decline marked the end of a year characterized by lower interest rates but increased economic uncertainty.
Certain Canadian markets experienced a slowdown in buyer activity in 2025 due to concerns over elevated unemployment rates and uncertainties stemming from the U.S. trade war. However, cities like St. John’s, Regina, and Quebec City saw significant boosts in both sales and prices, with Quebec City witnessing a remarkable 17% increase in prices year-over-year, largely attributed to 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% increase in sales for 2026, acknowledging that affordability remains a challenge along with limited supply in many regions across the country. The anticipated rise in sales is expected to be primarily driven by southern Ontario and British Columbia, regions that faced challenges in the previous year.
Despite these projections, industry experts and economists highlighted that housing prices continue to be unattainable for many prospective buyers, and renewed uncertainties surrounding U.S. relations could further deter first-time buyers from entering the market in the coming months.
In major markets, home sales in Toronto hit a 20-year low in December, with only 62,433 homes sold in the city in 2025, the lowest level since 2000. Similarly, Vancouver recorded 23,800 home sales, a figure even lower than the number of homes sold during the 2008 financial crisis.
John Pasalis, president and broker at Realosophy Realty, noted that while Toronto’s housing market showed signs of improvement, 2026 is expected to reflect similar trends of economic unease, potentially hindering a significant recovery. The housing markets in southern Ontario and parts of British Columbia have witnessed a cooling effect, with an influx of new listings contributing to downward pressure on home prices.
Furthermore, regions like Quebec, the Atlantic provinces, and the Prairies have maintained stable or even strong housing market activity. Shaun Cathcart pointed out that Quebec City was previously undervalued in the North American housing market, while provinces like New Brunswick, Nova Scotia, Prince Edward Island, Saskatchewan, and Manitoba continue to offer relatively affordable housing options.
Economic fears could further dampen housing market activity, according to Robert Hogue, assistant chief economist at RBC. He emphasized the importance of considering the post-COVID-19 surge in home prices and the subsequent corrections observed in regions like southern Ontario. The future trajectory of the housing market will be influenced by the Canadian economy’s performance, with factors such as labor market conditions playing a crucial role in determining demand and price stability.
While the Bank of Canada is not expected to adjust interest rates in the near term, uncertainties related to international trade agreements, including the CUSMA pact renegotiations, could impact market dynamics. Analysts anticipate ongoing concerns regarding economic uncertainties and labor market conditions, which may shape the housing market outlook throughout the year.