Home sales and prices fell year-over-year in October but rose slightly from September as Canada's real estate market continues to gradually recover from trade war-related shocks in early 2025, the Canadian Real Estate Association (CREA) said Monday.
In its latest housing market report, CREA said 42,068 homes changed hands nationwide in October, up 0.9 percent from the previous month but down 4.3 percent from a year ago.
Shaun Cathcart, senior economist at CREA, said sales activity was “moving in the right direction”, albeit slowly due to ongoing tariff-related economic uncertainty.
“The market really came to life last October, in this very narrow window between rate cuts, but we weren't in a trade war yet. So we're a little bit behind,” he said. “But in general there has been a steady upward trend compared to the beginning of the year.”
The non-seasonally adjusted national average sales price increased 0.2 percent from September but fell 1.1 percent year over year to $690,195.
The non-seasonally adjusted National Composite MLS Home Price Index fell 3 percent in October compared to a year earlier, marking the smallest year-over-year decline since March, according to CREA.
Cathcart said house prices fell year-on-year, reflecting weakness in the first quarter of 2025 when “the initial tariff shock pushed everyone back to the sidelines and pulled the rug out from under the spring market.” However, he said prices would no longer fall.
“I think once the winter passes and we get into the start of next year, the year-over-year declines will become smaller,” Cathcart said. “We may even move back into positive territory as I don’t expect any further price decline at this point as buyers come back into the market.”
Homes listed for sale across all Canadian MLS systems increased 7.2 per cent year-over-year with 189,000 listings in October, which is “very close” to the long-term average for this time of year, according to CREA.
CREA reported 79,225 new listings on the market last month, down 1.4 percent from September. The association said fewer listings and increased sales activity “decreased” the ratio of sales to new listings to 52.2 percent in October, compared to 51 percent the previous month.
The ratio is below the long-term average of 54.9 percent, with “values between 45 and 65 percent generally consistent with balanced real estate market conditions,” CREA said in a news release.
CREA said inventory levels were “substantially unchanged” compared to July, August and September, totaling 4.4 months nationwide at the end of October — the lowest level since January and below the five-month long-term average. Anything under 3.6 months of inventory is considered a seller's market, while 6.4 months or more is considered a buyer's market.
Despite concerns about overall economic uncertainty and job security dampening the real estate market, Canada's chronic housing shortage relative to its population continues to drive demand, said Don Kottick, president of real estate brokerage REMAX Canada.
“There's a large portion of the population that needs to move for life reasons, whether it's because of a divorce, because they need to downsize, or because they need to expand because their family is growing,” he said. “So this pent-up demand isn’t going away, and it’s just a question of when it’s going to collapse.”
Kottick said affordability remains a key concern for homebuyers and the combination of falling prices in many regions and lower interest rates could boost activity in 2026.
Since January, the Bank of Canada has cut its key interest rate, which currently stands at 2.25 percent, four times.
Cathcart said many Canadians may have been hesitant to commit to a five-year fixed rate – the most popular mortgage term – when they thought rates were still falling, but may change their mind after the central bank signaled in its latest decision on Oct. 29 that it could come with easing.
“I think this could really bring a lot of these buyers off the sidelines,” he said. “But the question is whether that will happen over the winter, which is usually slower, or whether we have to wait for next spring.”
• Email: jswitzer@postmedia.com