Inventory climbs as buyers hesitate in the face of economic uncertainty
Canada’s housing market started 2025 with a rare mid-winter jump in new home listings, even as home sales weakened late in the month amid uncertainty over the potential for a trade war with the United States.
The sudden increase in available homes, paired with a slowdown in buyer activity, has softened conditions after months of steady tightening, the Canadian Real Estate Association (CREA) reported Tuesday.
New data from Canadian MLS® Systems shows that new listings surged by 11% from December, marking one of the largest seasonally adjusted increases in supply on record outside of the pandemic. This sharp rise in inventory came at an unusual time of year, when new listings typically remain subdued.
Meanwhile, home sales dropped 3.3% from the previous month, but the decline was largely concentrated in the final week of January.
“The standout trends to begin the year were a big jump in new supply at an uncommon time of year, as well as a weakening in sales which only showed up around the last week of January,” said CREA senior economist Shaun Cathcart. “The timing of that change in demand leaves little doubt as to the cause – uncertainty around tariffs.”
With more homes hitting the market while sales slow, the sales-to-new listings ratio fell to 49.3%, down from the mid-to-high 50% range seen in Q4 2024. While the market remains technically balanced – historically, ratios between 45% and 65% indicate stable conditions – the shift represents a marked cooling compared to recent months.
Inventory levels also rose significantly, with 136,000 properties listed for sale at the end of January, up 12.7% from a year earlier. However, this remains below the long-term January average of 160,000 listings.
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The months of inventory, a key measure of supply relative to demand, rose to 4.2 months, up from readings in the high threes seen in the last quarter of 2024. A seller’s market typically exists when inventory is below 3.6 months, while a buyer’s market emerges when it exceeds 6.5 months.
“Together with higher supply, this means markets that had been steadily tightening up since last fall are now suddenly in a softer pricing situation again, particularly in British Columbia and Ontario,” Cathcart added.
Home prices hold steady
Despite shifting market dynamics, home prices have remained relatively flat. The National Composite MLS® Home Price Index (HPI) dipped just 0.08% from December, while the non-seasonally adjusted index was up 0.07% from January 2024—marking the first annual increase in nearly a year.
However, price trends varied by region. Ongoing weakness in British Columbia and Ontario continues to offset gains in the Prairies, Quebec, and Atlantic Canada, where prices have been on the rise.
The national average home price reached $670,064 in January, up 1.1% year over year.
“While we continue to anticipate a more active spring for the housing sector, the threat of a trade war with our largest trading partner is a major dark cloud on the horizon,” CREA chair James Mabey said in the report.
“While uncertainty about the economy and jobs will no doubt keep some prospective buyers on the sidelines, a softer pricing environment alongside lower interest rates will be an opportunity for others. If you’re looking to buy or sell a property in 2025, contact a REALTOR® in your area as the first step.”
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