Canadian home sales sink to two-year low

Trade jitters and economic uncertainty keep homebuyers on the sidelines

Canadian home sales sink to two-year low

Canadian home sales took a sharp downturn in February, with market activity hitting its lowest level in nearly two years.

The decline, fueled by ongoing economic uncertainty and trade tensions with the United States, has left buyers hesitant to enter the market despite favourable mortgage rates and rising inventory.

According to the Canadian Real Estate Association (CREA), home sales recorded through MLS® Systems fell 9.8% month-over-month, the steepest decline since May 2022. On a year-over-year basis, actual sales were down 10.4%.

The slump was most pronounced in Ontario’s Greater Golden Horseshoe region, where economic concerns have weighed heavily on market sentiment.

“The moment tariffs were first announced on January 20, a gap opened between home sales recorded this year and last,” CREA senior economist Shaun Cathcart said in the report. “This trend continued to widen throughout February, leading to a significant, but hardly surprising, drop in monthly activity. This is already being reflected in renewed price softness.”

The MLS® Home Price Index (HPI) declined 0.8% month-over-month in February, marking the largest drop since December 2023. Compared to the same period last year, the index was down 1%. The national average sale price also fell 3.3% year-over-year.

New listings fell 12.7% in February, wiping out the surprise increase recorded in January. Despite this, the number of properties listed for sale on MLS® Systems rose 13.1% year-over-year, reaching 146,250 – still below the long-term average of 174,000 listings for this time of year.

The national sales-to-new listings ratio edged up slightly to 49.9%, still within the balanced market range of 45% to 65%. Meanwhile, months of inventory rose to 4.7 months, approaching the long-term average of five months.

Adding to the market concerns, Canada Mortgage and Housing Corporation (CMHC) reported a slowdown in housing starts. The seasonally adjusted annual rate of new home construction fell to 229,030 units in February, down from 239,322 in January.

Single-detached home starts dipped 1%, while multi-unit starts fell 5%, reflecting weaker builder confidence and reduced demand in the face of ongoing economic uncertainty.

Read more: Canada housing market unlikely to surge despite plunging interest rates

Concerns over US tariffs have cast a shadow over Canada’s housing market. Mortgage expert Clay Jarvis, of NerdWallet Canada, pointed to the growing uncertainty surrounding US trade policies as a major factor behind the slowdown.

Trump’s tariff onslaught is having a chilling effect on home sales,” said Jarvis. “Sales were predictably down from January, but to see them fall to their lowest level in almost two years hammers home just how doubtful Canadians are about making a major purchase right now. Who can blame them?

“Trump’s steel and aluminum tariffs have barely had a chance to sink their teeth into the economy, and another round of tariffs could be coming on April 2 – or tomorrow. Total chaos is not the ideal backdrop for a healthy housing market, so expect sales to keep slowing until home buyers feel the ground beneath them might not give way at any moment.”

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