The new year hasn't brought much relief to Canada's housing market. January data reveals what many homeowners and buyers already suspected: prices are still falling, inventory keeps climbing, and the buyer's market that defined 2025 is carrying forward with momentum.

Supply-demand conditions weakened further across most large Canadian markets as the month unfolded. Potential buyers remained cautious despite elevated inventory giving them the upper hand. Severe winter weather likely contributed to the slowdown too, with significant precipitation in several regions keeping prospective buyers on the sidelines when they might otherwise have ventured out to viewings.

The patterns were also complicated by calendar oddities. January 2026 contained more working days compared to a year ago, while December's working day count aligned unusually with January's. That rare occurrence probably exaggerated some trends, making comparisons trickier than usual.

Still, the underlying story remained consistent. Demand plummeted in several markets, particularly Vancouver and Fraser Valley, while Edmonton, Winnipeg and Saskatoon posted notably weak results. Toronto and Montreal continued to soften as well. Calgary and Regina were among the few outliers to see an increase in buying activity, though even there, supply gains overshadowed demand.

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Toronto

January data revealed continued softness in the Greater Toronto Area with sales contracting 9.9% seasonally adjusted from December.

The downturn extends challenging conditions that characterized 2025, marking the fourth consecutive monthly decrease and the largest such contraction in almost a year. Ontario's severe winter weather, including one of the largest snowfalls in years, was likely a contributor to suppressed activity. But let's be honest: soft market conditions left prospective buyers with little urgency to venture out anyway.

New listings picked up marginally (1.1% SA), adding to the stockpile of inventory sitting idle. Year-over-year growth in active listings has moderated in recent months, but inventory remains stubbornly elevated relative to historical norms. Active listings rose 8.1% to 17,975 as properties stayed on the market longer.

Supply-demand conditions continue to favour buyers, maintaining downward pressure on prices. The MLS Composite Home Price Index remained on a downtrend through January, dropping 8% from a year ago, the 22nd consecutive decline and sharpest drop in three years.

For the first time in five years, the average GTA home price dipped below $1 million, landing at $973,289. That's a psychological threshold that matters to both buyers and sellers, even if the practical difference between $1,003,000 and $973,000 isn't enormous. The benchmark price of $936,100 represents an 8% year-over-year decline.

All property types felt the pain. Detached home prices fell 7.2%, semi-detached dropped 9.7%, townhouses declined 7%, and condos slipped 9.8% compared to last year.

The Toronto Regional Real Estate Board projects 60,000 to 70,000 sales for 2026, with average prices expected to remain between $1 million and $1.03 million. But an Ipsos survey found only 22% of GTA households intend to buy this year, down five percentage points from 2025. Affordability has improved, yes, but uncertainty continues to weigh on long-term decisions like homeownership.

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Montreal

The slowdown that ended 2025 in the Montreal area persisted into January. Sales decreased an estimated 1.4% seasonally adjusted from December. But here's what's different: a significant influx of new listings, driven primarily by condos, is finally rebalancing the market. The sales-to-new-listings ratio has settled into an equilibrium for the first time in months.

This shift is already tempering price growth. Median single-family home prices moderated with annual gains slowing from 7.8% in December to roughly half that pace in January as the market moves into balance. Condo appreciation remains the slowest of the three property types with the median price increasing by just 2% from a year ago.

But here's the catch: notwithstanding January's supply increase, active listings remain relatively subdued, limiting buyer choice. Quebec had an SNLR of 111% for December 2025, among the strongest seller's markets in the country. Constrained inventory will likely pave the way for larger price appreciations in the year ahead as buyer confidence slowly strengthens.

Montreal stands out as one of Canada's more resilient markets. The average home price was up 8% year-over-year to $551,998 in December, though it dipped slightly month-over-month. The city's relative affordability compared to Toronto and Vancouver continues to draw buyers, even as the broader national market struggles.

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Vancouver

January interrupted a string of improvements over recent months in the Vancouver market, and it wasn't subtle about it.

Sales plummeted nearly 29% from December, erasing three consecutive months of modest gains and exposing just how fragile recent improvement had been. While seasonal adjustment factors may be exaggerating some of the weakness, the underlying picture remains decidedly challenged.

Total sales of 1,107 transactions marked a 28.7% decrease from January 2025 and landed 31% below the 10-year seasonal average. That made it the fourth-slowest January for sales in over two decades.

Resales continue to lag well below the 10-year seasonal average, while listings sit significantly above historical norms. It's a combination that keeps leverage in buyers' hands and prices on a downtrend. Greater Vancouver's MLS HPI benchmark fell 5.7% year-over-year to $1,101,900 in January, marking nearly a year of annual declines.

Detached homes saw sales drop to 300 transactions, down 21.1% year-over-year, with the benchmark price at $1,850,800, down 7.3% annually. Condos faced the steepest slowdown, with sales falling 34.5% to 554 units and the benchmark price dropping to $704,600, down 5.9% from last year.

Total inventory stood at 12,628 properties, roughly 38% above the 10-year average. The sales-to-active listings ratio for January 2026 was just 9.1%, well below the 12% threshold that typically signals downward pressure on prices.

Tentative signs of stabilization capped off 2025, but the market continues to face poor affordability and elevated supply relative to buyer demand. Royal LePage forecasts a 3.5% decline in Greater Vancouver's aggregate home price by Q4 2026, with single-family homes expected to drop 5%.

Andrew Lis, GVR's chief economist, expects 2026 will likely resemble 2025 on many fronts, with sales remaining tepid. When paired with sellers remaining eager to list, inventory will likely stay elevated relative to historical averages, and prices are expected to finish the year relatively unchanged.

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Calgary

Sales rose 7.3% seasonally adjusted in January from December in Calgary, a notable uptick after a sluggish finish to 2025.

But gains were overshadowed by an even larger jump in new listings, reinforcing supply dominance that continues to define the market. At 1,234 sales in January, the market saw a 15% decrease from the same month last year. New listings of 2,785 decreased slightly year-over-year but remained elevated, with inventory climbing 21% to 4,391 units, the highest January level since 2020.

Elevated inventory is keeping home prices on a downtrend. The composite HPI benchmark tumbled 4.7% year-over-year to $554,400, though the deterioration wasn't distributed evenly across property types. Detached homes are holding up better than higher-density units, with the average price actually increasing 0.1% year-over-year to $781,000. Meanwhile, townhouses dropped 6.6% to $435,000 and condos fell 5.9% to $332,000.

The market sits at 3.6 months of supply, technically balanced conditions. But for apartments specifically, inventory stands at 5.3 months, reflecting buyer's market conditions in that segment.

Lots of residential construction in the pipeline suggests inventory will remain elevated, preventing dynamics from shifting into the seller's favour without an adequate increase in demand. Calgary Real Estate Board data shows the city has substantially more new construction activity than most other markets, which will continue to pressure prices in 2026.

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What's Behind the National Slowdown?

Several forces are converging to keep the market soft.

Interest rates have stabilized, but they're not dropping further. After multiple Bank of Canada rate cuts throughout 2024 and 2025, borrowing conditions have improved, but the BoC has signaled rates are now about as good as they're likely to get. Market expectations of stable rates until 2027 act as a brake on sales activity. The powerful boost of further rate cuts that some forecast simply isn't materializing.

Economic uncertainty looms large. Trade tensions with the United States weigh heavily on buyer psychology. With U.S. President Donald Trump continuing to threaten new tariffs on Canadian products and a formal review of the trade agreement set for July, many households are hesitant to commit to long-term mortgages until Canada's economic situation becomes less precarious.

Population dynamics are shifting too. Statistics Canada reported the country's population fell in Q3 2025, with Ontario seeing the largest drop of any province. A pullback in temporary student permits in Ontario led to a net loss of over 100,000 non-permanent residents in the third quarter. Federal government plans call for national population growth to slow to near zero through 2028, which will primarily affect rental demand but also puts a ceiling on housing demand more broadly.

Mortgage renewal headwinds are real. A large portion of outstanding Canadian mortgages are expected to renew in 2026. Since many of these renewals will be at higher rates than their initial contracts, especially five-year fixed mortgages, homeowners will face payment increases. This rising cost of ownership will force or encourage some sellers to list, adding to supply pressures.

The construction boom continues unabated. Nearly 180,000 purpose-built rental units are currently under construction nationwide, enough to lift the existing rental stock by more than 7% as they complete. Every province will see meaningful supply growth, but the surge will be most pronounced in B.C., Alberta and Atlantic Canada. This supply wave is arriving just as population growth slows dramatically.

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What This Means for Buyers and Sellers

For buyers, conditions are about as favourable as they've been in years. Lower prices, stable interest rates, and plenty of inventory to choose from create genuine opportunities. Average days on market have climbed significantly—Toronto properties now sit for 45 days on average, up from 37 last year, while property days on market reached 67 from 55. That gives buyers more time to be selective and negotiate effectively.

But there's a catch. Renter households in the GTA face a gap of nearly $600 per month between affordable mortgage payments and the payments required to purchase the type of home they want. Prices are falling, but "falling" is relative. A $1-million home is still largely out of reach for the average renter trying to break into ownership.

For sellers, the picture is more challenging. Realistic pricing based on current and projected comparable sales, not past ones, is essential. There's an acute risk of chasing the market down by listing at aspirational prices, as all indicators point to a market where value is being methodically recalibrated downward every month by cautious buyers.

Market conditions in the first half of 2026 are expected to resemble 2025 levels. If economic prospects and consumer confidence improve in the second half of the year, pent-up demand from the past several years could begin to be satisfied. The CREA forecasts 494,512 residential properties will trade hands via Canadian MLS Systems in 2026, representing a 5.1% increase from 2025, driven largely by British Columbia and Ontario where sales have more room to recover.

The national average home price is forecast to rise 2.8% on an annual basis to $698,881 in 2026, with smaller increases in B.C., Alberta, Ontario, and Nova Scotia. But that masks significant regional variation and doesn't account for continued softness in major markets through at least the first half of the year.

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The Path Forward

The Canadian housing market is experiencing what economists call a reset rather than a rebound. After years of price growth that far outpaced incomes, particularly in Toronto and Vancouver, the market is finding a new equilibrium. That process is painful for homeowners watching their equity decline, but it's creating opportunities for buyers who've been priced out for years.

Whether 2026 marks the beginning of a recovery or simply another year of adjustment depends largely on factors beyond the housing market itself. Economic clarity around trade relationships, job market stability, and consumer confidence will ultimately determine when buyers feel comfortable moving off the sidelines in meaningful numbers.

For now, the data tells a consistent story: inventory is elevated, demand is cautious, and prices are adjusting downward across most major markets. That's the reality sellers need to accept and the opportunity buyers should consider carefully. Whether you're looking to buy your first home or navigate a challenging sale, understanding current market dynamics and working with experienced professionals at Coldwell Banker Horizon Realty can help you make informed decisions in this evolving landscape—reach out to discuss how these trends specifically impact your situation and timeline.