Canada Home Sales Outlook Downgraded as Market Turns Corner

For the second time this year, the Canadian Real Estate Association (CREA) has lowered its outlook for national home sales in 2025, even as June’s activity suggests a possible market rebound. CREA reported a 3.5% increase in the number of homes changing hands in June compared with the same month last year, and a seasonally adjusted 2.8% rise over May.

In its updated forecast released Tuesday, CREA now expects 469,503 residential transactions in 2025, a 3% decline from 2024. That is a notable downgrade from April’s projection, which anticipated essentially flat sales, and a large reversal from the association’s January outlook that had forecast an 8.6% year-over-year increase for 2025.

CREA says market recovery may be coming

CREA now forecasts the national average home price to fall 1.7% year-over-year to $677,368 in 2025, about $10,000 lower than its April projection. Senior economist Shaun Cathcart noted that, despite a “chaotic start to the year,” the latest data indicate the rebound CREA had expected could be only a few months delayed.

Cathcart cautioned that risks remain, especially after another tariff threat from U.S. President Donald Trump. CREA said tariff-related uncertainty earlier this year hit activity in British Columbia, Alberta and Ontario harder than expected, but added that markets appear to be entering a recovery phase driven by pent-up demand, lower interest rates and a Canadian economy that could avoid worst-case tariff outcomes.

“Most housing markets continued to turn a corner in June, although market conditions still vary considerably depending on where you are in Canada,” said CREA chair Valérie Paquin. She added that if spring weakness was primarily driven by economic uncertainty, that delayed demand could surface over the summer and into the fall—provided there are no further major shocks.

Home sales expected to pick back up in 2026

Looking ahead, CREA now forecasts national home sales to climb 6.3% in 2026 to 499,081 transactions, bringing activity back in line with the association’s April expectations. The national average home price is projected to rise 3% from 2025 to an estimated $697,929 next year.

On a monthly basis, the national average sale price edged lower: June’s average of $691,643 was down 1.3% from a year earlier. There were 47,871 sales recorded in June, up from 46,237 in June 2024. CREA said the recovery in recent months was led primarily by the Greater Toronto Area.

Cameron Forbes, a Toronto-area broker and general manager at Re/Max Realtron Realty Inc., said activity still feels slower than it should, with many otherwise qualified buyers remaining sidelined because of tariff-related headlines. He said that buyers who have job security and equity could be in a good position to move or trade up, but uncertainty has kept many reluctant to act.

Inventory down from May but listings higher year-over-year

New listings fell 2.9% from May, leaving 206,435 properties on the market by month’s end. That number is up 11.4% from a year earlier and sits about 1% below the long-term seasonal average. TD economist Marc Ercolao said June’s performance was broadly in line with expectations: transactions are gradually recovering from their early-year lows as pent-up demand trickles back into the market, though elevated economic uncertainty—especially over tariffs—should keep activity subdued.

BMO senior economist Robert Kavcic highlighted three factors restraining housing demand: a sluggish job market that the trade dispute has worsened, mortgage rates near 4% that are not low enough to meaningfully improve affordability, and a shift in market psychology where falling prices are discouraging buyers in some locations.

Forbes emphasized that the outcome of ongoing Canada-U.S. trade negotiations, which have an Aug. 1 deadline, will be pivotal. A timely compromise could encourage buyers to return and support a healthier market; a missed deadline would prolong uncertainty and likely keep sales subdued for several months as the implications become clearer.

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