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Canada’s housing market closed out 2025 without much hype as home resales and prices declined in December.
The softness underscores several headwinds—including persistent affordability challenges, economic uncertainty, and job market slack—continuing to constrain a meaningful recovery.
Home resales fell 2.7% in December from November, while the MLS Home Price Index eased 0.3% nationwide.
Resales in Toronto fell 0.4%, while Montreal, Vancouver, Calgary, Edmonton, and Ottawa all posted more pronounced declines of 2.5% to 5.7%. The wide range reflects the divergent regional dynamics that have come to define Canada’s housing landscape.
Price weakness remains concentrated in Ontario and B.C.
Home values are falling in Ontario and British Columbia, where affordability pressures are most acute, and inventory is elevated.
Buyers have shifted decisively to a position of strength with ample choice allowing them to be selective.
The MLS HPI in Toronto fell further in December, continuing a downward trajectory that has delivered a 6.3% decline over the past year.
Southern Ontario fared similarly with Kitchener-Waterloo down 8.6%, London 8.3% lower, and Hamilton down 7.4% year-over-year.
In B.C., Vancouver recorded a 4.5% monthly decline in transactions with the MLS HPI falling 4.5% annually, while the Fraser Valley dropped 6.2% over the same period.
These declines, while substantial, remain insufficient to fully reverse the massive pandemic-era surge of more than 50%, leaving affordability strained for prospective buyers.
Alberta has also come under pressure as rising inventory—buoyed by new construction—weighs on home values. Calgary’s MLS HPI held steady month-over-month in December, but declined 3.2% from a year ago, signalling even Western markets face headwinds from supply dynamics.
Markets that continue to display resilience
The MLS HPI posted year-over-year gains between 5.9% and 17% across major markets in Quebec with monthly advances recorded in December.
Quebec City continues to outpace the nation with its MLS HPI surging 17% annually, and advancing a robust 3.2% from November.
Home values in Saskatchewan and Manitoba remain similarly well supported with the MLS HPI up between 6.2% and 6.9% year-over-year. The Atlantic region’s price trends also predominantly show an upward tilt.
That said, rapid price appreciation in markets like Quebec City may be creating headwinds. Resales have weakened considerably in recent months as the pace of price gains materially erodes affordability.
2025 proved challenging for Canada’s housing market
Overall, resale transactions fell 1.9% last year compared to 2024 as the trade war derailed a recovery supported by material interest rate cuts from the Bank of Canada.
Regional divergences was the real story. Weakness has been concentrated in Ontario and B.C., while other parts of the country held up relatively better.
Regional divisions to persist into early 2026
A broader market recovery will hinge on the pace of confidence rebuilding—a process likely to be gradual given modest projected economic growth and muted population gains ahead.
Past interest rate cuts will provide some support, but our view that rates have reached their cyclical lows suggests limited additional stimulus from monetary policy.
Nonetheless, improving labour market conditions and a return to normalcy in consumer sentiment could gradually draw buyers from the sidelines and support a turnaround.
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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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