Canadian Housing Market Update: Sales Cool as Inventory Rebuilds

Vancouver, BC

The latest data for the Canadian housing market shows a clear cooling in sales activity alongside an early-year rise in listings—conditions that are nudging the national market closer to historically “normal” supply-demand territory, even as pricing continues to soften.

Sales Activity Pulls Back

According to the Canadian Real Estate Association (CREA), home sales in January fell 5.8% from December on a seasonally adjusted basis, and were 16.2% lower than a year earlier, a decline CREA attributed largely to weather impacts in southern Ontario. The same CREA release noted that new listings rose 7.3% month over month, creating a rare combination of more new supply and fewer completed transactions to start the year.

Toronto, ON

Prices Are Softening, With HPI Declines More Telling Than Averages

Pricing is easing, but the most useful signal right now is the Home Price Index rather than national averages, which can swing with changes in what’s selling. CREA reported the National Composite MLS® Home Price Index fell 0.9% month over month in January and was down 4.9% year over year—a more telling indication of broad-based softening across a benchmark measure designed to track the price of a “typical” home over time.

CREA additionally reported that the national average sale price was $652,941 in January, down 2.6% from a year earlier. That combination—HPI down and average price also lower year over year—points to a market where price pressure is notable, even if it is not uniform across regions.

Supply Is Rising Toward Balanced Conditions

A key shift in January involved supply. CREA reported 140,680 properties listed for sale at the end of the month, up 4.5% year over year (though still below the long-term average for this time of year). Nationally, months of inventory rose to 4.9 from 4.6 in December, bringing the market close to CREA’s cited long-run norm of about five months.

Another useful read on balance is the sales-to-new listings ratio. CREA noted that this ratio dropped to 45% in January, a level associated with more balanced conditions after a period where demand repeatedly outpaced supply.

Peggy’s Cove, NS

Regional Divergence Remains the Defining Feature

Even as Canada’s national data moves toward balance, local markets are not behaving the same way. CREA noted that year-over-year price declines in British Columbia, Alberta, and Ontario have been an offset to gains elsewhere. In Metro Vancouver specifically, Greater Vancouver REALTORS® reported a notably quiet start to the year, with sales well below the seasonal average and benchmark pricing continuing to ease—an example of how slower demand and higher active supply can translate into downward pressure.

Outlook: Stabilization, Not a Snapback

Looking ahead, the market’s near-term shape depends on whether improving supply continues to meet demand that is still constrained by affordability and confidence. On the macro side, the Bank of Canada’s projections (as of its October 2025 Monetary Policy Report) anticipated Canadian economic growth averaging about 1.4% in 2026 and 2027, while also noting downside risks tied to trade conflict and uncertainty.

In housing terms, that backdrop supports a base case of gradual stabilization rather than a rapid rebound. More listings are giving buyers choice and time—two things that were scarce for much of the past cycle—while sellers are operating in a more competitive environment where pricing and positioning matter earlier in the listing period.

Montreal, QC

What the Current Market Means for Buyers and Sellers

For buyers, the combination of softer pricing measures (particularly the HPI) and improving inventory is creating a more navigable shopping environment, especially compared to the last several winters. For sellers, when demand is softer and buyers have alternatives, timing and pricing strategy become the difference between momentum and a long market stay.

In the future, the key tells will be whether January’s weather-distorted slowdown rebounds in sales volume, and whether the early-year surge in listings continues—two signals that will clarify whether the market is simply thawing from winter disruption or settling into a longer, more durable rebalancing.