National home sales in Canada decreased by 1.9% in December compared to the same period in the previous year, as per a report released by the Canadian Real Estate Association (CREA) on Wednesday. This decline capped off a year marked by lower interest rates but heightened economic uncertainties.
Certain Canadian markets experienced subdued buyer activity in 2025, influenced by elevated unemployment rates and concerns stemming from the U.S. trade war. However, regions like St. John’s, Regina, and Quebec City witnessed a significant boost in both activity and prices, particularly Quebec City, where prices surged by 17% year-over-year following the Bank of Canada’s decision to reduce its key interest rate by a full percentage point in 2025.
CREA’s senior economist, Shaun Cathcart, anticipates a modest 5.1% increase in sales for 2026, citing lingering affordability challenges and limited supply in many parts of the country as key constraints. The association foresees the majority of the sales growth to come from southern Ontario and British Columbia, regions that faced challenges in the past year.
Despite the positive outlook, real estate professionals and economists caution that prices remain unattainable for many potential homebuyers, and renewed uncertainties surrounding U.S. relations could deter first-time buyers from entering the market in the coming months.
In Toronto, home sales hit a 20-year low in December, with only 62,433 homes sold last year, the lowest level since 2000. Similarly, Vancouver recorded 23,800 home sales, a figure even lower than during the 2008 financial crisis.
John Pasalis, president and broker at Realosophy Realty, noted that while Toronto’s housing market may be transitioning after a sluggish year, 2026 is showing signs of continued challenges. Economic fears and trade war uncertainties are expected to influence the market, making a substantial rebound unlikely in the near future.
In southern Ontario and parts of British Columbia, housing markets have cooled off, with an influx of new listings pressuring home prices downward. Hamilton recorded its slowest home sales in December since 2010, reflecting a 12% year-over-year decline.
According to Robert Hogue, assistant chief economist at RBC, regions like Quebec, the Atlantic provinces, and the Prairies have maintained stable or even active housing markets. Cathcart highlighted Quebec City as an underpriced market in North America, while other provinces like New Brunswick, Nova Scotia, Prince Edward Island, Saskatchewan, and Manitoba have shown strong activity due to relatively affordable housing options.
Looking ahead, Hogue emphasized that the current housing market dynamics should be considered in the context of post-COVID-19 price surges, especially in smaller cities like London and Waterloo. The future trajectory of the housing market will depend on the Canadian economy’s direction, with factors like improved labor markets potentially stabilizing demand and prices or weaker economic performance leading to further price corrections.
While the Bank of Canada is not expected to adjust interest rates in the near term, uncertainties surrounding trade agreements, such as the upcoming CUSMA renegotiations, could impact the market sentiment. Economic uncertainty and questions about labor market improvements are likely to linger throughout the year, influencing market trends.