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Canada’s housing market closed out 2025 with less momentum than many had expected, as home sales dipped in December and prices showed early signs of softening in several major cities.
According to new data from the Canadian Real Estate Association (CREA), national home sales fell 2.7% month over month in December, while total transactions for the year came in at 470,314 — down 1.9% from 2024.
“There doesn’t appear to have been much rhyme or reason to the month-over-month decline in home sales in December,” said Shaun Cathcart, CREA’s senior economist, in a statement. “For that reason, it would be prudent for market observers to resist the temptation to trace a line from the end of 2025 into 2026.”
December’s slowdown reinforces that the housing market is no longer being driven by urgency or fear of missing out, according to Joel Fox, COO and co-founder of Ownright, who spoke with Money.ca.
“The quiet finish to 2025 reinforces that this is a negotiation-first market rather than a momentum-driven one,” Fox said. “Buyers shouldn’t expect bidding wars to suddenly reappear just because rates are lower, and sellers shouldn’t assume prices will rebound quickly without concessions.”
Fox said buyers are moving more selectively, weighing price, condition and long-term value rather than acting quickly.
“For sellers, that means realistic pricing and flexibility matter more than timing,” he said. “For buyers, it’s an opportunity to negotiate on terms, conditions, and price, but only if they’re comfortable with a longer decision cycle.”
CREA has cautioned against assuming December’s softness is a signal of where 2026 is headed. Fox agrees, and says misreading the current environment could lead to costly mistakes.
“The biggest risk is assuming that flat activity automatically equals recovery,” Fox said. “A quiet market doesn’t mean prices are about to rise. Because of tariff uncertainty and a challenging labour market, people are waiting for clearer signals that the market will actually be stable.”
That uncertainty, he said, can push buyers to rush unnecessarily or sellers to hold out too long.
“Buyers may assume they need to act before prices rebound, while sellers may wait for spring momentum to do the work for them,” Fox said. “Both assumptions can backfire.”
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CREA has said in a statement that the spring market could benefit from several years of pent-up demand and borrowing costs that are “about as good as they are going to get,” but late-2025 data shows buyers remain cautious.
Sales stalled toward year-end even as prices softened modestly and inventory stayed constrained, suggesting many households are still waiting for clearer signals before committing.
“If activity picks up, it’s most likely to come from first-time buyers and downsizers — not investors,” Fox said. “Investors have largely stepped back, particularly in condo markets, because the math still doesn’t work the way it once did.”
CREA data shows price declines have been steeper for condos and townhomes than for detached homes, with much of the recent softening concentrated in Ontario’s Greater Golden Horseshoe.
Nationally, the MLS Home Price Index was down 4% year-over-year in December, but detached homes have generally held value better.
“Condos and townhomes were heavily influenced by investor demand, and that demand has pulled back sharply,” Fox said. “Detached homes are more end-user driven and more resilient.”
For buyers, that divergence may create selective opportunities — but only with a longer time horizon.
“Condos may offer value in 2026, but only if buyers plan to live in the home long enough to ride out volatility,” Fox said. “For sellers, expectations need to reflect that shift.”
CREA Chair Valérie Paquin said in a statement that the spring market could benefit from pent-up demand and improved borrowing conditions, provided confidence stabilizes.
“While we remain in the quiet time of year for a little while longer, the spring market is now just around the corner,” Paquin said. “Barring any further major uncertainty-causing events, that means we should see a more active market this year.”
For consumers, the message heading into 2026 is less about timing the market and more about understanding it. While overall conditions are still positive, the market is far from roaring back into action.
Buyers and sellers who anchor decisions to today’s pricing, inventory and confidence levels — rather than last year’s headlines — are likely to be best positioned heading into spring 2026.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
