Real Estate Outlook 2025: Market Shows Signs of Recovery Amid Uncertainty

The Canadian real estate market showed signs of recovery in June, with national home sales increasing for the second consecutive month. Sales rose by 2.8% from May to June, largely driven by strong activity in the Greater Toronto Area, where cumulative growth since April reached 17.4%. Despite these monthly gains, the Canadian Real Estate Association (CREA) has updated its annual forecast, now expecting a 3% drop in total home sales compared to 2024. While prices have stabilized, overall market performance remains below previous highs, and CREA notes that conditions vary greatly by region.

One notable shift is the decrease in new property listings, which fell by 2.9% in June. This came after several months of rising inventory. At the same time, the national average sale price saw a 1.3% year-over-year decrease. CREA is also predicting a 1.7% drop in average home prices compared to last year. These figures suggest that although prices have steadied, overall affordability remains a concern, and the pace of new listings may not be enough to balance market dynamics fully.

Falling interest rates are providing some relief to buyers, with the Bank of Canada reducing its policy rate from 5% in April to 2.75% currently. Lower rates can increase purchasing power, and experts believe this could help unlock more buyer demand later in the year. However, the market still faces challenges. The Toronto condo market, for example, has seen a dramatic slowdown. Sales of condominium apartments in the first quarter of 2025 were down 21.7% compared to the same period in 2024, and new condo sales are reportedly at their lowest level in 30 years.

Despite these hurdles, CREA believes the housing market is gradually turning a corner. Job stability, lower rates, and rising inventory could create favorable conditions for those planning long-term homeownership. Activity is expected to rebound in 2026, with national sales projected to grow by 6.3%. Still, CREA cautions that economic uncertainty remains high, and the recent announcement of new U.S. tariffs on Canada could further complicate the outlook. Regional differences will continue to play a key role, with some provinces like British Columbia, Alberta, and Ontario expected to post declines, while others may show moderate growth.