The Canadian Real Estate Association has released updated projections that signal continued challenges for Canada's housing market, with home sales expected to decline 3% in 2025 despite recent monthly improvements. The revised forecast reflects ongoing economic uncertainty and regional market variations across the country.

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National Sales Projections Show Continued Weakness

CREA's revised forecast predicts 469,503 residential properties will change hands through MLS Systems in 2025, marking the fourth consecutive year that national sales will fail to reach the 500,000 threshold. This milestone has only occurred seven times since tracking began in 2007, highlighting the exceptional nature of current market conditions.

The downward revision represents a significant shift from earlier optimistic projections. British Columbia, Alberta, and Ontario account for the majority of projected declines, while other provinces are expected to post modest gains that partially offset these reductions.

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Recent Monthly Performance Offers Mixed Signals

Despite the bearish annual outlook, recent monthly data provides some encouragement for market participants. June home sales increased 2.8% on a month-over-month basis, marking the second consecutive month of growth after a challenging start to the year.

The Greater Toronto Area has emerged as a standout performer, with cumulative sales climbing 17.4% since April. This regional strength demonstrates that pockets of recovery are emerging despite broader market headwinds.

However, new listings declined 2.9% month-over-month in June, breaking a trend of steady inventory increases. Overall inventory remains elevated, sitting 11.4% higher than last year's levels, which continues to favor buyers in many markets.

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Price Projections Reflect Regional Disparities

The national average home price is forecast to decline 1.7% annually to$677,368 in 2025, approximately$10,000 lower than projections made in April. This adjustment reflects both reduced sales volumes and price pressures in expensive provincial markets.

Only British Columbia and Ontario are expected to experience price declines this year, but their impact on the national average is amplified due to higher absolute price levels. All other provinces are projected to see price gains ranging from 4% to 8%, demonstrating the significant regional variations characterizing Canada's housing landscape.

The actual national average sale price in June reached$691,643, down 1.3% compared to the same month in 2024, indicating that price corrections are already underway in key markets.

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Interest Rate Environment Remains Challenging

The Bank of Canada's decision to hold its policy rate at 2.75% following seven consecutive cuts has added another layer of complexity to housing market dynamics. After reducing rates from 5% in April 2024, the central bank paused further cuts due to economic uncertainty and potential inflationary pressures from trade policy changes.

This pause affects both current buyers and those considering market entry. Variable mortgage holders have benefited from previous rate reductions, but the halt in cuts means borrowing costs will likely remain at current levels through the remainder of 2025.

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Market Conditions Favor Buyers in Many Regions

Current market dynamics have shifted the balance toward buyers in numerous markets across Canada. The sales-to-new-listings ratio fell to 45.9% in recent months, well below the long-term average of 54.9%. Ratios below 45% typically indicate buyer's market conditions, providing purchasers with increased selection and negotiating leverage.

Enhanced inventory levels, combined with more measured buyer demand, create opportunities for well-positioned purchasers to secure favorable terms. First-time buyers and those with job security may find particularly attractive options in markets where inventory has increased substantially.

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Toronto Condo Market Presents Unique Opportunities

The Greater Toronto Area's condominium market illustrates the complexity of current conditions. Sales of condominium apartments dropped 21.7% in the first quarter of 2025 compared to 2024, with new condominium sales reaching levels not seen in three decades according to Urbanation Inc. research.

This dramatic slowdown in Toronto's condo sector represents both a challenge for sellers and a potential opportunity for buyers seeking urban housing options at more accessible price points.

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2026 Recovery Expectations Remain Cautious

Looking ahead, CREA projects a 6.3% rebound in national home sales for 2026, reaching 499,081 transactions. While this represents meaningful improvement, it would still leave activity below the 500,000 threshold, emphasizing the extended nature of current market adjustments.

The national average home price is expected to increase 3% in 2026 to$697,929, marking the sixth consecutive year that average prices remain around the$700,000 level. This price stability, combined with potentially improved sales volumes, could signal a gradual return to more balanced market conditions.

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Economic Uncertainty Continues to Shape Market Dynamics

CREA acknowledges that all forecasts remain subject to high levels of uncertainty, though conditions may be more predictable now than during the first half of 2025. Trade policy developments, inflation trends, and broader economic performance will continue influencing housing market outcomes.

The delayed recovery timeline, with market improvements shifting from spring to summer, reflects how external economic factors can rapidly alter housing market trajectories even when fundamental conditions appear supportive.

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Expert Guidance Essential in Complex Market Environment

Valérie Paquin, Chair of CREA's Board of Directors, emphasizes the importance of local market knowledge: "Market conditions still vary considerably depending on where you are in Canada. If you're looking to buy or sell a property in the second half of 2025, start planning with a REALTOR in your area today."

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Navigate Today's Housing Market with Confidence

In this period of market transition and regional variation, partnering with experienced real estate professionals becomes more critical than ever. At Coldwell Banker Horizon Realty, our team understands the nuances of local market conditions and can help you capitalize on emerging opportunities.

Whether you're a first-time buyer looking to take advantage of increased inventory and buyer-favorable conditions, or a seller seeking to position your property strategically in a selective market, our expertise ensures you make informed decisions based on current data and local trends.

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Ready to explore your real estate opportunities in today's market? Contact Coldwell Banker Horizon Realty for a comprehensive market analysis and personalized strategy session. Our professional team will help you navigate these complex market conditions and achieve your real estate goals with confidence.

Source: CREA