Canadian Housing Market Update: Sales Level Off as New Listings Rise

Toronto, ON

Canada’s housing market has entered fall without extending the momentum it built earlier in the year. National home sales edged down in August, while more properties came to market and prices held close to their spring levels. For buyers, that means more choice without much additional pressure from rising prices. For sellers, it means the market is functioning, but homes are not moving with the urgency seen during stronger periods.

According to CREA’s latest national housing data, home sales fell 0.7% from July to August and were 6.9% below August 2025. Activity has now changed little since May, suggesting the spring recovery has settled into a holding pattern rather than continuing to build.

More Listings Give Buyers Room

New listings increased 3.3% in August after three consecutive monthly declines. With sales easing at the same time, the national sales-to-new-listings ratio fell from 51.1% in July to 49.1%.

That still falls within the range CREA associates with a balanced market, but the direction is important. Buyers are seeing more options relative to the number of homes selling, which can give them more time to compare properties and negotiate rather than competing immediately for limited inventory.

Just under 200,000 properties were listed for sale across Canadian MLS® Systems at the end of August, roughly in line with the historical average for the month. Months of inventory remained at 4.8 for the fourth consecutive month, just below the long-term average of five months.

Prices Continue to Hold

The National Composite MLS® Home Price Index was unchanged from July and has moved little since the spring. Compared with August 2025, the index was down 3%.

The national average sale price, meanwhile, rose 0.6% year over year to $668,219. Because the average can move when a greater share of sales occurs in more or less expensive markets, the HPI gives a clearer picture of underlying price movement.

The figures show that prices have stabilized month to month even though they remain below last year’s levels by the HPI measure, but regional differences remain substantial. Ontario recorded its lowest August sales total in 25 years, while its benchmark price fell 3.6% from a year earlier. Newfoundland and Labrador moved in the opposite direction, with  its benchmark price rising 6.8% year over year to $358,400, even as sales declined 7.1%.

Banff, AB

Borrowing Costs Are Less Predictable

The Bank of Canada held its policy rate at 2.25% on September 2, but the outlook for mortgage rates has become less straightforward.

Higher bond yields have already pushed some fixed mortgage rates upward. That matters even with home prices relatively stable: a higher mortgage rate can increase a buyer’s monthly payment without any change in the sale price.

Affordability has still improved from its recent worst levels. RBC’s latest affordability report placed its national measure at 52.8% in the second quarter, down 0.4 percentage point. The measure tracks homeownership costs as a share of household income, so a decline represents an improvement in affordability. But that improvement came mainly from rising household incomes, and RBC cautioned that higher long-term rates could slow further progress.

Fewer Starts Add a Longer-Term Concern

New construction is also losing momentum. CMHC reported that the six-month trend in housing starts declined 1.3% in August to 244,149 annualized units. Actual monthly housing starts in centres with populations of 10,000 or more were 2% below August 2025, while starts in those areas during the first eight months of the year were down 4% from the same period in 2025.

The slowdown does not necessarily affect buyers shopping this fall, but it’s worth noting for the years ahead. Fewer homes beginning construction today can mean less new supply reaching the market later, especially in areas where housing availability is already limited.

What to Watch This Fall

For now, the market is offering buyers more inventory and relatively stable prices, but without a major improvement in borrowing costs. Sellers are operating in a market that is balanced nationally but softer in several high-priced regions. September’s numbers, which will be released later this month, will show whether the fall season changes that picture or extends the same pattern seen since May.