Economic uncertainty caused by the U.S. trade war weighed on Toronto real estate sales in 2025, but lower prices, stable interest rates and clarity over the fate of a major trade deal could help restore confidence in the market this year.
Economists currently expect the Bank of Canada to keep its key interest rate steady at 2.25 per cent in 2026, which could prompt homebuyers to take action rather than wait for the next cut, said Tom Storey, a real estate agent at Royal LePage.
“Given the trajectory of bond yields, fixed rates appear likely to be at their lowest in some time,” he said. “That certainty that interest rates will stay where they are will be an important decision-making factor for people this year.”
The Toronto Regional Real Estate Board's (TRREB) latest market report, released Wednesday, showed sales across the Greater Toronto Area (GTA) fell 11.2 per cent in 2025 compared to last year. New listings increased 10 percent, “allowing sales prices to be negotiated downward,” the report said.
According to TRREB, the annual average sales price in 2025 was $1,067,968, down 4.7 percent from $1,120,241 in 2024.
“The GTA housing market became more affordable in 2025 as sales prices and mortgage rates trended lower. Improved affordability has primed the market for recovery,” TRREB President Daniel Steinfeld said in a news release.
Storey said houses are slightly cheaper compared to previous years, but that doesn't necessarily make them affordable. He said it's important to note that most people buy properties with mortgages, and he encourages buyers to calculate how much ownership will actually cost them each month.
“There was a significant change in property prices in 2025. We had a much smaller change in the actual cost of owning a property when you need a mortgage,” he said.
TRREB data shows home sales ended December 2025 down 8.9 percent year-over-year, while the average sales price fell 5.1 percent to $1,006,735. The benchmark composite price, which represents a “typical” home, fell six percent to $942,300.
Sales of all housing types fell year-over-year in December, including single-family homes (1.7 percent) and semi-detached homes (6.9 percent), townhouses (22.5 percent) and condominiums (11.2 percent).
After Toronto's condo market endured a year of falling prices, a decline in new and existing unit sales, and a surge in inventory and project cancellations, Storey said he expects the slowdown on the new construction side to continue, rather than prices to rise in the resale market.
“I think the big corrections have happened and I think certain types of properties are selling much better than others, but there will still be a little bit of downward pressure (on prices),” Storey said.
The upcoming review of the Canada-US-Mexico Agreement (CUSMA) this year will be another catalyst for the real estate market in the coming year.
“Confirmed trade relationships and large-scale domestic economic development projects will be key to improved home sales going forward,” TRREB Chief Information Officer Jason Mercer said in a news release. “GTA households must have confidence in their employment situation before committing to long-term monthly mortgage payments, even in this more affordable market.”
Storey said even a slight increase in overall consumer confidence could help sales volumes increase in 2026, but that would not necessarily impact prices in the short term.
“Personally, I think sales will be a little better. But in the best case scenario, and I say this in a nice way, a 'boring' year in real estate in Toronto would be a wonderful thing. Stable rates, stable prices and a little higher sales volume.”
• Email: jswitzer@postmedia.com