Home sales and prices were down year-over-year in October, but have risen since September as Canada’s housing market continues to gradually recover from trade war-induced shocks in early 2025, the Canadian Real Estate Association (CREA) said on Monday.
In its latest report on the real estate market, CREA said 42,068 homes changed owners nationwide in October, 0.9 percent more than the previous month but 4.3 percent less than last year.
Shaun Cathcart, senior economist at CREA, said sales activity “is moving in the right direction,” albeit slowly due to persistent economic uncertainty related to tariffs.
“The market really came alive last October in this very narrow window of time between when rates went down but we weren’t in a trade war yet. So we’re a little bit short of that,” he said. “But overall, compared to the beginning of this year, things have been trending steadily upward.”
The non-seasonally adjusted national average sales price increased 0.2 percent from September, but fell 1.1 percent year over year to $690,195.
The non-seasonally adjusted MLS National Composite Home Price Index was down three percent in October compared to last year, which CREA said was the smallest year-over-year drop since March.
Cathcart said home prices are down from a year ago due to weakness in the first quarter of 2025, when “the initial tariff shock scared everyone off the sidelines and brought down the spring market.” However, he stated that prices are no longer falling.
“I think once we get through the winter and get into early next year, we’ll see those year-over-year declines reduce,” Cathcart said. “We could even return to positive territory, because I don’t see prices falling further at this time, as buyers return to the market.”
Properties listed for sale across all Canadian MLS systems increased 7.2 per cent year over year with 189,000 listings in October, which CREA says is “very close” to the long-term average for this time of year.
CREA reported that 79,225 new listings hit the market last month, down 1.4 percent from September. The association said fewer listings and increased sales activity “constrained” October’s ratio of sales to new listings to 52.2 percent, compared to 51 percent the previous month.
The ratio is below the long-term average of 54.9 percent, with “readings of approximately 45 percent to 65 percent generally consistent with balanced housing market conditions,” CREA said in a statement.
CREA said inventory remained “basically unchanged” from July, August and September with 4.4 months of inventory nationwide at the end of October. — the lowest level since January and below the five-month long-term average. Anything less than 3.6 months worth of inventory is considered a seller’s market, while 6.4 months or more is considered a buyer’s market.
Despite concerns about greater economic uncertainty and job security tempering the housing market, the fact that Canada has a chronic housing shortage relative to its population continues to drive demand, said Don Kottick, president of real estate brokerage REMAX Canada.
“There is a large segment of the population that is going to need to move for life reasons, whether it’s divorce, whether they need to downsize or whether they need to expand because their families are growing,” he said. “So, that pent-up demand is not going away, and it’s just a question of when it’s going to break.”
Kottick said affordability remains a top concern for homebuyers, and the combination of falling prices in many regions and lower interest rates may encourage activity in 2026.
Since January, the Bank of Canada has issued four cuts to its benchmark interest rate, which currently stands at 2.25 per cent.
Cathcart said many Canadians may have been hesitant to lock in a five-year fixed rate – the most popular mortgage term – when they thought interest rates were still falling, but they could change their minds after the central bank signaled in its latest decision on Oct. 29 that it could now end easing.
“I think that could really take a lot of those buyers off the bench,” he said. “But the only question is whether that will happen during the winter, which is normally slower, or whether we will have to wait until next spring.”
• Email: jswitzer@postmedia.com
