Key Takeaways
- Home resales slowed down in December across most Canadian regions due to affordability challenges, economic uncertainty, and job market softness.
- Increased inventory in southern Ontario and British Columbia gave buyers more options and bargaining power, leading to falling home values in areas like Vancouver, Calgary, and Toronto.
- Prices in parts of the Prairies, Quebec, and Atlantic Canada maintained solid gains due to better affordability.
- The Toronto area faced significant downward price pressure, with resales falling for the fourth time in five months and the composite MLS Home Price Index declining 0.7% from November.
- Montreal’s modest recovery lost momentum in the closing months of 2025, while Vancouver showed tentative signs of recovery despite ongoing weakness.
Introduction to the Canadian Housing Market
The Canadian housing market experienced a subdued finish to 2025, with home resales slowing down in December across most regions. Adverse weather conditions may have played a role in some areas, but persistent affordability challenges, economic uncertainty, and job market softness were likely more significant factors. The lackluster finish marked a year that started with promising recoveries in several housing markets, supported by significant interest rate cuts. However, the trade war and ensuing loss of confidence quickly dashed these recoveries.
Toronto Area Challenges
The Toronto area faced significant challenges in December, with an early arrival of winter complicating the search and marketing of homes. Resales remained stalled, sustaining significant downward price pressure amid abundant inventory and fierce seller competition. The composite MLS Home Price Index declined further in December, falling 0.7% from November seasonally adjusted, and 6.3% from a year ago. Condo prices, especially in the 905 area, faced the strongest pressure, but the downward trend was widespread and impacted all housing categories and sub-areas. The road ahead is expected to remain bumpy, with poor affordability, tariff-related economic uncertainty, challenging job prospects, lower immigration, and plenty of inventory generating headwinds.
Montreal Area Soft Patch
Montreal’s modest recovery lost momentum in the closing months of 2025. Resales fell marginally in December from November seasonally adjusted, following a 2.8% drop the previous month. This contrasts with a strong finish to 2024 when interest rate cuts stirred up activity. The late-2025 slowdown could be attributed to fewer homes being put up for sale in the fall, which likely kept some prospective buyers wanting. Inventory is still historically constrained, despite increasing 12% from a year ago. Available single-family homes haven’t risen at all, with inventory expansion almost exclusively resulting from more condos for sale. Home values continue to appreciate moderately, with single-family homes gaining the most. The median sales price for this category is up 7.8% from December last year, significantly more than the 1.4% advance in condos.
Vancouver Area Weakness
The Vancouver area’s picture is still weak, despite tentative signs of recovery emerging since summer. Transactions have picked up after reaching a three-year low in spring, but the advance to date is modest. December resales remained 15% below the 10-year average, and the path is uneven, with activity slipping for the second time in seven months in December from November seasonally adjusted. Buyers’ ongoing struggles with poor affordability are keeping many on the sidelines. Lower interest rates and price declines in the past year and a half have only partly restored their capacity to purchase a home. A doubling in homes for sale since 2022 also offers buyers more options and time to decide, with a stronger bargaining position. Home values are falling as a result, with the area’s MLS HPI down 4.5% from a year ago in December.
Calgary’s Stable and Balanced Market
Calgary ended the year in a largely stable and balanced position. Resales ticked lower in December from November seasonally adjusted, but were little changed from spring. Earlier tightness in supply-demand eased in the past year, and inventory has replenished after plummeting to a decades’ low in 2023. Home values have yet to steady, though, with the composite MLS HPI down 4.7% from a year ago in December, the steepest annual decline in nine years. A historic ramp-up in homebuilding since 2022 has contributed to homes for sale reaching a seven-year high in 2025, ultimately weighing on prices. Home values are expected to continue easing in the short term as more supply comes to the market, with many newly constructed homes being built, and builders currently working on a record 26,000 units.
Conclusion and Outlook
In conclusion, the Canadian housing market experienced a subdued finish to 2025, with home resales slowing down in December across most regions. Affordability challenges, economic uncertainty, and job market softness were significant factors contributing to this slowdown. The Toronto area faced significant downward price pressure, while Montreal’s modest recovery lost momentum. Vancouver showed tentative signs of recovery, despite ongoing weakness, and Calgary’s market remained stable and balanced. As the market moves forward, it is expected that lower interest rates and recovering confidence will drive demand, and higher prices will attract more sellers. However, the road ahead is expected to remain bumpy, with ongoing challenges and uncertainties in the market.