Canadian Housing Market Update: Buyers Are Returning, but Prices Are Still Uneven

Vancouver, BC

After a slower start to spring, May brought Canada’s housing market a stronger sales month, a slightly tighter balance between sales and new listings, and some evidence that price declines are becoming less pronounced. The catch is that national activity is still trailing last year, and the price picture depends heavily on which measure and market you look at.

According to the Canadian Real Estate Association, national home sales jumped 5.5% month over month in May, which suggests that some buyers may be getting more comfortable with current borrowing costs, but affordability has not suddenly changed.

New listings edged down 1% from April, which helped the national sales-to-new-listings ratio tighten to 49.2%, compared with 46.2% in April. That keeps the national market within balanced territory, but with a little less slack than buyers had earlier in the spring.

Supply also looks less heavy than it did a few months ago. CREA reported just over 200,000 properties listed for sale across Canadian MLS® Systems at the end of May, unchanged from a year earlier and still below the long-term average for that time of year. Months of inventory fell to 4.8, down from 5.1 in February, March, and April, and close to the long-term average of five months. 

Prices are where the market still looks uneven. The National Composite MLS® Home Price Index edged down 0.1% month over month and was 4.1% below May 2025. The monthly decline was mild, but the annual decline shows that broad benchmark pricing remains softer than last year.

The national average sale price sent a different signal, rising 1.5% year over year to $702,079. That was the highest monthly national average in two years, but average prices can move with the mix of homes sold. In a country where higher-priced markets can heavily influence the national figure, the HPI remains the cleaner read on whether the typical home is gaining or losing value.

Regionally, CREA noted that prices remained down year over year in British Columbia, Alberta, and Ontario, while gains in other provinces offset some of that weakness. This means that in some expensive markets, buyers still have room to be selective and sellers are competing against recent price adjustments. But in more resilient markets, especially where affordability is less stretched or local demand has held up, conditions can feel tighter than the national headline suggests.

Interest rates are still setting the tone. On June 10, the Bank of Canada held its target for the overnight rate at 2.25%, leaving borrowers without the fresh rate cut that could have pulled more sidelined buyers into the market. The Bank pointed to a mix of weak growth and inflation risk, with global energy prices and trade uncertainty complicating the path ahead.

The resale market is not the only part of the story. CMHC reported that total housing starts fell 6% in May to 261,377 units, down from 278,380 in April. One month does not define the construction pipeline, but it adds to a broader concern: Canada needs more housing, yet high costs, financing pressure, slower population growth, and weaker condominium presales are weighing on future supply.

CMHC’s 2026 Housing Market Outlook also warned that housing starts are expected to slow in 2026, with a larger decline expected in 2027 and 2028. That creates a complicated backdrop. Resale buyers may see more choice today, but weaker future construction could tighten conditions later if demand returns more fully.

For now, the Canadian market looks steadier than it did earlier in the spring, but still uneven. Buyers returned in May, inventory moved closer to normal, and price declines moderated on a monthly basis. At the same time, year-over-year sales remain lower, benchmark prices are still below last year, and borrowing costs continue to limit what many households can afford. The summer market will likely depend on whether this activity continues throughout the season, and whether sellers adjust quickly enough to meet a buyer pool that is active but still highly price-sensitive.