Tariff Worries Weigh on Canadian Home Sales

Canadian MLS systems posted a double-digit jump in new listings in January, up 11 per cent when compared to December. This big jump in new supply is uncommon for the time of year and aside from some of the wild swings seen during the pandemic, it was the largest seasonally adjusted monthly increase on record going back to the late 1980s.

At the same time, sales were down 3.3 per cent month-over-month though they fell mainly at the end of January, likely due to uncertainty over the potential for a trade war with the United States. There were close to 136,000 properties listed for sale, up 12.7 per cent from a year earlier.

Together with higher supply, this means markets that had been steadily tightening up since last fall are now suddenly in a softer pricing situation again, particularly in British Columbia and Ontario.

There were 4.2 months of inventory on a national basis at the end of January, up from readings in the high threes in the last three months of 2024, resulting in a more balanced market. 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 average price of a home was just over $670,000 in January, up 1.1 per cent year-over-year. Ongoing softness in British Columbia and Ontario was offset by rising prices in the Prairies, Quebec and across the East Coast.

Although the Canadian Real Estate Association (CREA) is still expecting a more active spring for the housing sector, it says the threat of a trade war with the country’s largest trading partner is a major dark cloud on the horizon.

“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,” says CREA chair James Mabey.