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Confidence in the Canadian housing market came under renewed pressure in September as escalation in the trade war with the United Sates, and rising long-term interest rates put buyers on the defensive.
Most local real estate boards reported a drop in home resales including Vancouver, Fraser Valley, Calgary, Edmonton, Winnipeg, Hamilton, Kitchener-Waterloo, Toronto, Ottawa, Montreal and Quebec City.
Many have also shown easing home values— a continuing trend in Vancouver and the Fraser Valley where prices have steadily fallen since early 2025. And, it confirms the slight uptick in Toronto this summer was just temporary from its extended depreciation path.
Other boards noted prices stabilized. In Edmonton, it was from faster rates of depreciation earlier. For Ottawa and Montreal, it was from higher rates of appreciation.
Diverging trends across the country reflect different states of confidence, affordability, pent-up demand, demographics, job markets and market inventory. Even macroeconomic factors like interest rates and immigration policy see their impact shaped by the local context.
Generally, we expect improving affordability and a resilient economy will progressively unlock pent-up demand and support a mild recovery in Canada. But, the road ahead is likely to be bumpy and uneven across markets.
Toronto area: Veering off recovery course
It didn’t take long for the tentative recovery to go off course in the Toronto area. The timid rally lasted just five months to August. September confirmed the new direction with resales and the benchmark price losing another step down 5.2% and 0.5% month-over month, respectively.
Confidence had to continue rebuilding for the market healing to progress. Escalation of the trade war, rise in some interest rates and declining population had a destructive effect.
What’s still improving (for now) is inventory. Active listings continue tracking below a year ago (down 9.3% in September), thanks in part to fewer sellers entering the market. Inventory must stay on a declining trend for home values to eventually stabilize.
An abundance of condo apartments for sale remains—accounting for nearly a third of listings. This sustains heavier downward price pressure with the condo index falling 6.7% from a year ago, compared to a 4.7% drop for the single-detached index.
Montreal area: Increased supply dampens home value appreciation
Growing supply is this year’s dominant trend in Montreal. Inventory is now up 20% from a year ago, propelled by the strongest influx of sellers in six years amid calmer resales.
September saw a further rise in new listings (up 7.2% year-over-year and an estimated 1.5% m/m). Higher new home completions in the past 12 months (more than 24,000 units) have created a certain displacement effect in the market.
Inventory has grown the most on the North and South Shores, where active listings have surged 30% and 32% from 2025, respectively.
The process of rebalancing supply and demand continues to dampen home value appreciation. Median condo prices were flat from a year ago in September, and increased only marginally (up 0.4%) for single-family homes.
We expect stretched affordability, stalling population growth and rising long-term interest rates to contain housing demand ahead.
Vancouver area: Ongoing slump
September didn’t bring signs that the four-year-long slump is about to end in the Vancouver area. Home resales fell again (by nearly 8% from August seasonally adjusted), and prices remained squarely in correction mode with the composite MLS Home Price Index down 5.5% from a year ago.
Affordability and confidence issues remain major obstacles for buyers. Price declines to date have been insufficient to unlock pent-up demand sustainably.
Further depreciation will likely be necessary to draw in more buyers.
And with inventory remaining abundant—active listings are still near a decade high—and seller competition fierce, we think this is in the cards for the rest of this year and possibly into 2027.
Calgary: Holding relatively steady
Calgary’s state has changed little this year. Home resales remained generally stable and historically robust despite hovering below a year ago. Inventory largely stayed on last year’s track, keeping supply and demand balanced. Prices have also stabilized close to 2025.
Total transactions, new and active listings in September and the MLS HPI were all little changed from August after adjusting for seasonality.
But, the situation varied across housing types. Single-detached homes saw a 4.4% increase in resales and a 1% price drop from a year ago.
This contrasted with material declines of 14.3% and 8.3%, respectively, for condo apartments.
About the author:
Robert Hogue is the Assistant Chief Economist responsible for providing analysis and forecasts on the Canadian housing market and provincial economies.
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