Dwayne Linton

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity and average home prices via the Multiple Listing Service® (MLS®) Systems of Canadian real estate boards and associations and expanded the outlook to include 2026.

CREA’s latest forecast is little changed from the fall 2024 outlook. The assumption remains that the combination of two and a half years of pent-up demand and lower borrowing costs, together with the usual burst of spring listings will lead to a rebound in market activity across the country in 2025. There was a good preview of what that might look like during the fourth quarter of 2024.

In addition to lower mortgage rates, the expectation the Bank of Canada may soon signal that interest rates are about as low as they are likely to go in this easing cycle could spur even more demand from those who have been waiting for the right time to lock in a fixed-rate mortgage.

This rebound in demand is expected to play out differently across Canada, with British Columbia and Ontario expected to see bigger rebounds on the sales side owing to how low sales are there currently, together with more plentiful inventories, and less scope for price gains in these already expensive parts of the country.

By contrast, increased demand is expected to play out more on the price side in Alberta and Saskatchewan where sales were already near record levels in 2024, inventories are currently near-20-year lows, and prices are still relatively more affordable.

Manitoba, Quebec, and the Atlantic provinces are all expected to fall between these extremes, with both more sales and higher prices in 2025.

CANADA HOUSING MARKET: YEAR IN REVIEW

Canada’s national housing market slowed down to close 2024. National sales fell 5.8% (sa m/m) in December. New listings continued to pull back, dropping for the third month in a row by 1.7%.

National sales in December of 2024 were 19% higher than the same month in 2023; new listings were 10% higher. Despite December’s decline, sales in the last quarter of the year were 10% above the previous quarter.

The larger decline in sales relative to listings meant the sales-to-new listing ratio, a measure of the market’s tightness relative to historical averages and deviations, eased again after relatively steep increases the prior two months. The ratio stood at 56.9% in December, down from November’s 59.3% and only slightly above the mid-point of the balanced conditions’ zone (estimated between 44.7% and 66.1%). Months of inventory also signalled easing following the national market moves in December, climbing up to 3.9 from November’s recent low of 3.6, but still below its long-term average of 5 months of inventory. However, according to CREA, December’s 3.9 is within the lower range for a balanced market based on one standard deviation, making anything below 3.6 months within buyers’ territory.

The year as a whole recorded 7.3% more sales than in 2023, 11.2% more listings, and 0.9% higher average selling price—the opposite of the 2023 tally that saw all measures below their prior year average. The only exception is the sales-to-new listings ratio, which continued to ease from its 2021 peak of 77.9%. Sales in 2024 were just -0.1% below their 2010–19 annual average, while listings were 2.6% above.

With much of the early fall surge of supply having now been picked over, home sales activity recorded over Canadian MLS® Systems dipped in December 2024.

Sales were down 5.8% compared to November, but still stand 13% above where they were in May, just before the first interest rate cut by the Bank of Canada in early June.

The fourth quarter of 2024 saw sales up 10% from the third quarter and stood among the stronger quarters for activity in the last 20 years, not accounting for the pandemic.

“The number of homes sold across Canada declined in December compared to a stronger October and November, although that was likely more of a supply story than a demand story,” said Shaun Cathcart, CREA’s Senior Economist. “Our forecast continues to be for a significant unleashing of demand in the spring of 2025, with the expected bottom for interest rates coinciding with sellers listing properties for sale in big numbers once the snow melts.”

December Highlights:

• National home sales fell 5.8% month-over-month.
• Actual (not seasonally adjusted) monthly activity came in 19.2% above December 2023.
• The number of newly listed properties dipped 1.7% month-over-month.
• The MLS® Home Price Index (HPI) climbed 0.3% month-over-month and was only down 0.2% on a year-over-year basis.
• The actual (not seasonally adjusted) national average sale price was up 2.5% on a year-over-year basis.