EconoFACTS

May 14, 2026 | 09:17

Cdn. Home Sales & Prices — Late Thaw

Economist

Douglas Porter , CFA

Chief Economist and Managing Director
Economics

Douglas Porter brings more than three decades of experience analyzing gl... (Read more)

Douglas Porter , CFA

Chief Economist and Managing Director
Economics

Douglas Porter brings more than three decades of experience analyzing gl... (Read more)

Canadian existing home sales nudged up 0.7% in April from the prior month in seasonally adjusted terms, but no one is going to mistake this for a sign of spring for the chilly housing market. Sales remain 4% below last year's anemic levels and about 10% below normal April levels. With new listings edging up, the sales balance turned further against sellers and prices receded a bit further yet. The MLS Home Price Index dipped another 0.1% last month, pulling prices down 4.0% from year-ago levels and a towering 20.5% below the peaks hit just over four years ago (at the very height of the pandemic housing frenzy in February 2022).

While the price declines appear to be ebbing, the reality is that with the national sales-to-new listings ratio dropping to 45.6% in April, there is little prospect for a quick turn anytime soon. CREA suggests that a ratio between 45% and 65% is consistent with a balanced market; the ratio is scraping the very low end of that (generous) range, and we would assert that 45% is more consistent with falling prices. In fact, some further softness in prices may be precisely what's required to more fully return the Canadian housing market to normal affordability. While the big decline in interest rates and home prices over the past few years has improved affordability from the dire circumstances in 2023, we're still not back to long-term norms. And with the prospect of additional interest rate cuts all but erased—indeed, market pricing anticipates interest rate hikes ahead—that leaves only a further decline in prices as the avenue to improved affordability. Suffice it to say that if the Bank of Canada actually follows up on its musing about possible "consecutive" rate hikes, sales and—ultimately—prices will surely fall heavily. As it is, five-year bond yields are now up 30 bps from their average of the past year, already acting as a dampener on the market, without the BoC even lifting a finger.

While the national figures remain sluggish, the underlying picture continues to reveal vast regional variations, especially on the price side. Much of Ontario and B.C. are still seeing price declines, while much of the rest of the country is edging higher. However, as the table below suggests, sales are cooler in a variety of previously solid cities, with double-digit drops in Edmonton, Winnipeg, and Halifax so far this year. Even Calgary, which has previously sizzled, reports a near-10% drop in sales this year and some softening in prices (its HPI is down 2.1% y/y). The main takeaway is that while there are still substantial regional differences, much of the country is dealing with generally chilly activity.

Bottom Line: Expectations for a marked recovery in Canadian housing activity have been dialed back again, with sales dampened by consumer caution amid the upswing in (oil-driven) inflation and the related rise in long-term interest rates. Given lingering affordability issues in many regions of the country, and the now-distant prospect of any further rate cuts by the Bank of Canada, it's tough to see the market springing to life anytime soon.

Table 1 - Canada — Existing Home Sales

(% change)

Source: BMO Economics, Haver Analytics, CREA