National home sales in Canada dropped by 1.9% in December compared to the same month a year ago, according to a report released by the Canadian Real Estate Association (CREA) on Wednesday. This decline marked the end of a year characterized by lower interest rates alongside heightened economic concerns.
In 2025, certain Canadian markets experienced a decrease in buyer activity due to concerns related to elevated unemployment and apprehensions stemming from the U.S. trade war. However, regions like St. John’s, Regina, and Quebec City witnessed a significant boost in both activity and prices. Quebec City, in particular, saw a notable 17% increase in prices year-over-year as the Bank of Canada reduced its key interest rate by a full percentage point in 2025.
CREA’s senior economist, Shaun Cathcart, anticipates a modest 5.1% rise in sales for 2026, acknowledging that affordability and limited supply continue to pose challenges in various parts of the country. The association expects the majority of sales growth to come from southern Ontario and British Columbia, which encountered difficulties in the previous year.
Despite these positive developments, real estate professionals and economists caution that many potential homeowners still face unattainable prices, and ongoing uncertainties, particularly regarding U.S. relations, may deter first-time buyers from entering the market in the near future.
Looking ahead, December witnessed record-low home sales in two key markets. Toronto recorded 62,433 home sales in 2025, the lowest since 2000, while Vancouver reported 23,800 home sales, a figure even below the levels during the 2008 financial crisis.
John Pasalis, president of Realosophy Realty, noted that Toronto’s housing market, while showing signs of improvement, is expected to face similar challenges in 2026. Economic uncertainties, primarily driven by the U.S. trade war, could continue to influence the market, making a significant recovery unlikely in the short term.
Southern Ontario and parts of British Columbia have experienced a cooling trend in their housing markets, with an influx of new listings leading to downward pressure on prices. For instance, Hamilton saw its slowest home sales in December since 2010, with a 12% year-over-year decline.
Robert Hogue, assistant chief economist at RBC, highlighted the presence of more inventory in these markets, reducing the urgency for buyers to make quick decisions. Meanwhile, certain regions such as Quebec, the Atlantic provinces, and the Prairies have maintained stable or even robust activity.
Economic uncertainties could further dampen housing market activity, with Hogue mentioning the post-COVID-19 surge in home prices and subsequent corrections in certain regions. The trajectory of the Canadian economy will play a crucial role in determining future housing market dynamics, with factors like labor market conditions and trade uncertainties influencing price trends.
While the Bank of Canada is not expected to adjust interest rates in the near term, the central bank remains vigilant about changing economic conditions, particularly amid trade renegotiations. Hogue emphasized that ongoing economic uncertainties and labor market concerns are likely to impact market direction throughout the year.
