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In December 2025, Canadian home sales declined by 1.9% compared to the same period in the previous year, reflecting a year characterized by economic uncertainty. Despite lower interest rates, rising unemployment and global trade tensions, particularly with the U.S., kept many potential buyers on the sidelines. While some markets experienced stagnation, others, particularly in smaller cities, saw more favorable conditions. For example, St. John's, Regina, and Quebec City stood out, with Quebec City seeing a striking 17% year-over-year increase in home prices. This growth was partly driven by a full percentage point reduction in the Bank of Canada’s key interest rate. However, overall market activity remained subdued, as affordability and limited housing supply continued to be key constraints, especially in larger urban markets.

Looking ahead to 2026, experts expect a modest 5.1% increase in home sales across the country. Much of this uptick is expected to come from regions like southern Ontario and British Columbia, where sales were slower in 2025. However, challenges persist. Affordability will remain a significant barrier for many, particularly in major metropolitan areas like Toronto and Vancouver, where prices remain high despite a cooling market. These two cities, in particular, saw significant drops in sales, with Toronto recording its lowest level of home sales since 2000 and Vancouver not far behind. The combination of economic uncertainty, including concerns over the ongoing U.S. trade war and the potential fallout from renegotiations of the trade pact, has kept many buyers cautious. Experts warn that any potential rebound in these markets would likely be slow, as economic fears continue to weigh heavily on sentiment.

In contrast, some regions, including parts of Quebec, the Atlantic provinces, and the Prairies, have seen more stable or even robust housing markets. Areas like New Brunswick, Nova Scotia, and parts of Saskatchewan and Manitoba have remained relatively hot, with homes still more affordable compared to larger urban centers. While these markets haven’t experienced the dramatic price hikes seen in southern Ontario and B.C., they have benefited from consistent demand. However, even in these areas, there are signs of a market correction following the pandemic-induced housing surge. Experts suggest that much of this correction is tied to the rapid growth seen during the pandemic, which is now slowing as the market stabilizes. The outlook for 2026 will largely depend on broader economic conditions. If the labor market improves and economic growth picks up, housing demand could strengthen, helping to stabilize prices. On the other hand, a weaker-than-expected economic recovery could lead to further price declines. While the Bank of Canada is not expected to make immediate changes to interest rates, ongoing economic uncertainty and trade risks could continue to impact the housing market in the coming year.

Vancouver’s housing market is entering a phase of gradual adjustment rather than experiencing sharp price swings or dramatic changes. After two years of fluctuating interest rates and stalled transactions, the market is stabilizing. This shift is driven more by slow-moving fundamentals, such as population growth, household formation, and construction timelines, than by short-term sentiment or headlines. These factors shape the market's direction in a more predictable, steady manner, offering clearer insights into future trends.

Housing cycles are often viewed through price changes, but prices are just an outcome, not the cycle itself. The true cycle involves shifts in market activity, the availability of homes, and the ability of households to transact. In Vancouver, early signals of a market change can be seen in sales volumes, new listings, and rental conditions, with price changes following behind. Current data shows that while sales are low and inventory is up, the market is adjusting rather than correcting. Affordability constraints are limiting transactions, but demand is still there, preventing significant price drops.

Demand in Vancouver is driven by population growth and household formation, but these are not the same. While the population has grown, much of the increase has been absorbed by the rental market, as many newcomers rent or delay purchasing. Rising interest rates have further restricted potential buyers, deferred ownership demand while pushing more people into rentals. This shift in demand helps explain why Vancouver’s market hasn’t seen a major price correction. Demand exists, but affordability is preventing it from turning into transactions.

On the supply side, Vancouver’s housing market faces a significant lag. While construction activity has remained steady, the delivery of new homes takes years, especially for multi-family developments. Rising construction costs and financing challenges have slowed down the pace of new builds, and approval timelines add further delays. As a result, supply struggles to keep up with demand, especially in more affordable segments. This mismatch contributes to ongoing pressure on the market, even though sales activity has slowed.

Affordability remains the key constraint. Though home prices have eased, higher interest rates have raised borrowing costs significantly, making homeownership less accessible. This has limited the number of buyers, and those who are already homeowners are reluctant to sell due to manageable carrying costs. Fewer listings are contributing to market stagnation. At the same time, developers struggle to sell new units when buyers can’t secure financing. With rental demand still strong, the market is adjusting slowly, and Vancouver’s housing market is likely to continue this gradual shift in the years to come.

In 2025, the housing market experienced a notable shift after years of strong price growth, largely due to improved supply levels and reduced demand. The number of new listings surged to over 40,000, a 9% increase from the previous year, easing the pressure that had previously favored sellers. Reduced migration and ongoing uncertainty throughout the year helped balance market conditions. As a result, sales fell by 16% to 22,751 units, but this was still in line with long-term trends, indicating that the market was stabilizing after several years of rapid growth.

The rise in inventory played a significant role in this market transition. With more properties available, conditions shifted to favor buyers, particularly in apartment condominiums and row homes, where supply increases put downward pressure on prices. The overall annual average benchmark price for residential properties declined by 2%. However, the price trends varied significantly across property types and locations. Detached homes saw modest price increases of 1%, while apartment-style condos experienced a nearly 3% price drop. The North East district, in particular, saw significant price declines, while the City Centre remained relatively stable.

In the semi-detached market, prices rose by nearly 3% to an average of $685,850, despite a slight 8% drop in sales. Although this segment was smaller, it followed a similar pattern to detached homes. Meanwhile, row homes saw a 17% drop in sales, but with new listings on the rise, the market shifted to a more balanced state by the end of the year. As a result, prices for row homes declined by 2%, with the most significant price drops occurring in the North East and North districts.

The apartment condominium sector faced the largest adjustment, with sales dropping by 28% from 2024. However, demand remained higher than long-term averages due to an increase in available supply, particularly from purpose-built rental apartments. This shift contributed to a more buyer-friendly market in the second half of the year, pushing prices down by 3%. The steepest price declines were seen in the North East, while the West district experienced relative stability.

Overall, the 2025 housing market reflected a transition from a seller’s market to one of more balance, driven by higher supply and tempered demand. This shift led to price adjustments across various property types, with some areas experiencing price growth while others saw declines, particularly in sectors with increased inventory. The market’s balance by the year's end marked a significant change from the tight, high-demand conditions of previous years.