Canadian Housing Monitor

March 17, 2025 | 09:45

Canadian Housing Monitor: February 2025

Economist

Robert Kavcic

Senior Economist and Director
Economics

Robert has been with BMO Capital Markets since 2006. He plays a key role... (Read more)

Robert Kavcic

Senior Economist and Director
Economics

Robert has been with BMO Capital Markets since 2006. He plays a key role... (Read more)

Frozen

Canada’s housing market softened is February, with sales and prices both stepping down. We hesitate to read too much into these numbers and would prefer to see how activity looks when move into the spring. Consumer confidence has been rattled by the trade war, but the weather was also nasty in February (especially in Southern Ontario), hardly conducive of house shopping. We expect modest increases in sales volumes and national prices in 2025, but a prolonged trade battle could continue to weigh on confidence and activity.

Existing home sales fell 9.8% in seasonally-adjusted terms in February, and were down 10.4% from year-ago levels. Keep in mind last February had an extra day, and better weather (in Ontario). Still, this marks a very subdued level of sales, with activity falling steadily since November. Lower mortgage rates and some easing of mortgage rules have not triggered a notable jump in activity to this point. New listings also fell in the month, down 12.7% in seasonally-adjusted terms, but they were still up 4.2% from a year ago.

That combination left the market balance little changed in February. The national sales-to-new listings ratio rose slightly, and is still in balanced territory at 49.9%. Inventory, however, continues to build with the months' supply of homes for sale rising to 4.7 from 4.1 in January. That's not a major overhang of inventory at the national level, but it's the highest level since the 2020 lockdown.

Table 1 - Canada — Existing Home Sales

(% change)

Source: BMO Economics, Haver Analytics, CREA

Challenging conditions pulled down prices in February after a period of solid stability. The MLS benchmark price fell a seasonally-adjusted 0.8%, a second consecutive monthly decline, which pulled the year-on-year growth rate back into negative territory at -1.0%. Again, we don't want to read too much into a month with low volumes and bad weather, but it remains clear that Bank of Canada rate cuts haven't driven prices higher yet.

Conditions continue to vary widely by region and segment. The real weak spot remains Southern Ontario, where buyers' markets (or close to it) are evident across a number of cities. In Toronto, the glut of condos hitting the resale market is marking one of the weakest spots in Canadian real estate, with prices down 3.0% y/y. Single-detached prices in Toronto are also modestly below year-ago levels after falling in February.

Vancouver and some other markets across B.C. have also softened in recent months, as a record seasonally-adjusted number of new listings hit the market across the province early in the year.

On the flip side, markets in Quebec and further east are tight almost across the board as steadily rising sales outpace increases in new listings.

Calgary, Edmonton, Regina and Winnipeg also all see sellers’ markets and continue to outperform national averages for market balance and price growth. Prices in these markets have all returned to record highs relative to the recent correction and, unlike markets like Toronto and Vancouver, new listings are very stable.

All told, lower mortgage rates have yet to spur market activity, and confidence has clearly been impacted by the trade war. But, these figures were pulled from the depths of Canadian winter—thus, we'll reserve major judgement until the spring.

In a separate release, Canadian housing starts fell slightly to 229k annualized units in February, a still-solid level of new construction activity—but, the pace is gradually ratcheting down. The six-month average now sits at 239k annualized; the 12-month average is 243k and the annual high set in 2021 was above 270k. This comes as population growth is slowing sharply and the current pipeline of completions is meeting tough resale market conditions.

National Price Trends

Market Balance

Local Market Conditions

Recent Reports of Interest

Housing Outlook 2025: A Long Way Home:The Canadian housing market should post modest sales and price gains this year, but don’t expect another exuberant takeoff. Changing secular forces also suggest it’s still a long way back to the 2022 highs.

Canadian Mortgages: Fix or Float? With borrowing costs more likely to fall than rise—and by a lot in a possible trade war—a floating rate mortgage could pay off.

What Canada’s Immigration Shift Will and Will Not Do: Ottawa’s dramatic about-turn on immigration will turn Canada’s 3%+ population growth to near-zero in coming years.

Canada’s Housing Market in Charts: A chart-based tour of the market, and where it might be headed.

Mortgage Rules and Rates: The 3.9% Solution? Mortgage-rule changes will incrementally bolster demand.

Pathways to Affordability for Canada’s Housing Market: You would need to go back to the era of double-digit mortgage rates in the early 1990s to see the last time buying a home in Canada was as expensive as it is today. Is there a route back to affordability and, if so, how long will it take?

Extraordinary Population Delusions and the Trouble with Crowds: The narratives around the population boom have, in our view, been off the mark. Here are five things worth challenging.

Real Estate Investment: The Good, the Bad and the Implications: Does real estate investment make sense at this stage of the cycle? And if not, what are some implications?