Cooling Demand Pushes Home Sales Lower at Year-End
Canada’s residential real estate sales dropped sharply in December, ending a tepid year for the housing market when many buyers stayed on the sidelines.
National home sales for the month dropped by 2.7 per cent on a seasonally adjusted basis from November, and by 4.5 per cent in real numbers compared with December, 2024, according to data released Thursday by the Canadian Real Estate Association. Just over 26,000 homes were sold across the country in the last month of 2025.
Shaun Cathcart, senior economist for CREA, said the monthly decline came as a surprise, especially since the market was showing some signs of growth approaching the end of 2025.
Mr. Cathcart said December tends to be a volatile month because it is the slowest month for sales and has the smallest sample size for data.
Over all, home sales for the entirety of 2025 totalled 470,314 units, a 1.9-per-cent decrease from 2024. CREA characterized the year as having suffered from tariff concerns in the first quarter, rallying slightly in the middle of the year before stalling again in the last two months.
Mr. Cathcart said the winter – a slow period in Canadian real estate – may prove a difficult time to understand where the market is heading. It will likely take until spring to see whether a rebound in sales is coming in 2026.
Meanwhile, Mr. Cathcart noted that December’s sharp year-over-year decline is more notable for the strength of 2024’s numbers, rather than 2025’s weakness. The drop is largely from the spike that the market experienced during the latter months of 2024 when interest rates were falling.
“There was a very narrow window when rates came down quickly and people came back into the market, before January when [U.S. President Donald] Trump’s statements sent everyone flying back to the sidelines,” Mr. Cathcart said.
CREA’s November, 2025, report showed an even larger year-over-year decline, with sales being 10.7 per cent lower than a year prior.
Home values also dropped in the last month of 2025, as Mr. Cathcart said sellers tried to close deals before the end of the year. The national home price index dropped by 0.3 per cent on a month-over-month basis and 4 per cent on a year-over-year basis to $673,400.
Despite dropping sales in November and December, a Royal LePage report predicts 2026 will be a “crucial reset” year in which buyers will be drawn in by lower rates and higher supply.
Analysts largely expect that interest rates will hold steady in 2026, although there is some risk that a rate hike could be necessary later in the year if inflation becomes sticky.
“First-time buyers and those searching in the country’s most expensive regions have a rare window to act on their home ownership plans at reduced prices,” Phil Soper, president and chief executive officer of Royal LePage, said in a news release.
“While we don’t expect a sharp rebound, this improved affordability will rebuild market confidence among both buyers and sellers, setting the stage for more sustainable, albeit modest, price growth in 2026.”
The real estate agency forecast national home prices to increase by 1 per cent in 2026, but year-over-year prices in the Toronto and Vancouver areas are still expected to decline by 4.5 per cent and 3.5 per cent, respectively.
This article was first reported by The Globe and Mail
