Canada's housing market posted its sixth monthly gain in seven months in October, with 42,068 homes changing hands, up 0.9% from September. Sales remain 4.3% lower than October 2024, but the pattern of steady, if modest, growth has market observers wondering if we've reached an inflection point.
CREA Senior Economist Shaun Cathcart described September's dip as a "brief pause" in an ongoing recovery. "After a brief pause in September, home sales across Canada picked back up again in October, rejoining the trend in place since April," he said. With interest rates now "almost in stimulative territory," CREA expects housing activity to continue building momentum into 2026.
But calling an inflection point requires careful interpretation. The forces influencing 2026 are more structural, more political, and more global than monthly sales figures suggest.
The Numbers Show Modest Tightening
New supply contracted by 1.4% in October. The drop is small, yet its consequences are not. With sales on an upward trend, the sales-to-new listings ratio moved to 52.2% compared to 51% in September.
The shift appears modest on its face, but it signals a gradual tightening in a market that has spent much of the year operating below its long-term average of roughly 55%. This tightening matters because it's unfolding in an economy that doesn't outwardly reward risk.
Households are absorbing a labour market with 6.9% unemployment and rising part-time work. Investors are confronting declining rent inflation as immigration caps curb population growth. Yet the market tightens regardless, which reinforces a simple truth. End-user demand, shaped by real family needs rather than speculative intent, is rebuilding.
Inventory Tells a Complicated Story
Total inventory reached 189,000 listings at the end of October, up 7.2% from a year earlier. That sounds like loosening, not tightening. But context matters.
Inventory is higher than a year ago because 2024 subdued demand across most of the country. Yet the figure has stopped climbing. Months of inventory held at 4.4 for the fourth consecutive month, the lowest level since January. The long-term norm is five months.
The line between balance and tightening draws closer each quarter. Slower population growth prevents inventory from tightening too rapidly, which shields the market from bidding frenzies. But fewer new arrivals also limit distress sales and involuntary listings.
The result is a market that neither floods nor dries, but oscillates within a narrow band that often precedes a turning point.
Prices Show Small Gains, Smaller Declines
The MLS Home Price Index inched 0.2% higher month-over-month in October. The annual decline narrowed to 3%, the smallest year-over-year contraction since March. The national average price, now $690,195, is 1.1% lower than a year earlier.
These movements suggest the market may have completed much of its downward adjustment. Prices remain stable enough to quiet predictions of further decline, yet measured enough to avoid any impression of premature strength.
TD Bank economist Rishi Sondhi noted that the "recovery narrative" remains intact. "That said, sales levels are still relatively low, so we'd be hard pressed to call the recovery robust. Moving forward, we see sales continuing to grind higher, supported by pent-up demand, and some improvement in job markets next year."
Smaller Markets Are Leading the Recovery
After a brief slowdown in September, Canada's housing market regained momentum in October, picking up where it left off after five months of steady growth. But smaller and mid-sized regions are leading the recovery, while major markets like Toronto and Vancouver continue finding stability in balanced conditions.
CREA Chair Valérie Paquin said that even with seasonal cooling, signs of underlying demand are clear. "We continue to see clues that the housing market is picking up steam. All eyes will be on next year's spring market to see if that pent-up demand finally comes off the sidelines."
The Larger Economic Setting Shaping 2026
The housing outlook cannot be understood without the wider economic frame. Canada's labour market gained roughly 67,000 jobs in October, yet the broader pattern reveals an economy leaning on part-time work while unemployment remains near 7%.
Wage gains of around 3.5% to 4% help sustain basic demand, but they don't create the financial confidence that fuels aggressive bidding or high-risk investment. Real wage growth, after accounting for inflation, is only about 1.1%. That's not enough to dramatically shift affordability.
The 2026 USMCA Review Casts a Shadow
The global environment casts its own shadow. The 2026 United States-Mexico-Canada Agreement review introduces uncertainty at a delicate moment. Canada's manufacturing and export sectors depend heavily on stable trade conditions, and any turbulence could reduce hiring intentions in key provinces.
Households are sensitive to these risks. They monitor trade headlines as closely as rate announcements because both influence job security and long-term affordability.
Population policymaking has also played a central role. Immigration caps on temporary residents have slowed Canada's population growth more sharply than the country has seen in decades. The effect on rental markets has been immediate, with investor sentiment adjusting accordingly.
Rent inflation has moderated. Vacancy rates have edged higher. The urgency that pushes renters into ownership has softened, though in some tight submarkets, it persists.
Policy Forces Reshaping the Market
Recent federal reforms carry implications for both supply and demand sides of the housing market.
The removal of GST for eligible first-time buyers purchasing new homes introduces direct relief at a moment when affordability has narrowed to its tightest margins. The measure received concentrated attention during the most recent budget debates because it reduces the upfront tax burden on a cohort that has struggled to enter the market.
Its reach is limited to builder-delivered new homes rather than the resale stock where most transactions occur, yet it may refine the financial calculus for a fraction of first-time purchasers who have been constrained by high construction costs and the elevated thresholds imposed by the stress test.
Ottawa's decision to condition new federal housing funds on provincial commitments to reduce development charges represents a deeper structural shift. It seeks to replace fragmented local incentives with a framework that favours jurisdictions willing to align development fees with national housing objectives.
The transition will be gradual. Municipalities must amend bylaws. Developers must re-evaluate project economics. Lenders must regain conviction that pro-supply policies will endure. These steps will not alter household formation in 2026, but they lay groundwork for a more credible supply environment in the years that follow.
CREA's 2026 Forecast: Cautiously Optimistic
CREA forecasts national home sales will rebound by 7.7% to 509,479 in 2026, the highest level for activity since 2021, though still well below that peak and slightly under the 10-year average.
Historically, national home sales have only ever cracked the half-million mark seven times, with the first instance back in 2007. Reaching that threshold again would signal genuine recovery, not just stabilization.
The national average home price is forecast to increase by 3.2% from 2025 to $698,622 in 2026. This would mark the sixth straight year where the national average home price has hovered around the $700,000 range.
But CREA cautions that all forecasts remain subject to higher than normal levels of uncertainty. Early 2025 saw tariff chaos and economic uncertainty return many buyers to the sidelines. That could repeat if trade tensions escalate or if economic conditions deteriorate.
The Regional Divergence Continues
National averages mask significant regional variation. Ontario and British Columbia are forecast to see continued price declines or stagnation. Most other provinces are expected to see price gains of 4% to 8% in 2025.
Ontario residential sales numbered 15,078 units in October, down 5.7% from October 2024. Home sales were 2% below the five-year average and 14.7% below the 10-year average for October.
The average price of resale residential homes sold across Ontario was $833,376, a decrease of 5.2% from October 2024. That's a significantly larger decline than the 1.1% national average, reflecting continued weakness in the GTA and surrounding markets.
Meanwhile, markets like Saskatchewan, Newfoundland, Nova Scotia, and New Brunswick remain in seller's market territory with high sales-to-new-listings ratios and rising prices.
Is This Really an Inflection Point?
An inflection point implies a change in trajectory, not just a pause in decline or a modest uptick. By that definition, October's data shows promise but not proof.
Sales are rising, but they remain 4.3% below last year and well below 10-year averages. Prices are stabilizing, but they're still declining year-over-year. Inventory is tightening modestly, but it's still above historical norms in most major markets.
What we're seeing is stabilization with early signs of recovery. That's meaningful after years of decline, but it's not the same as a confirmed turn.
The spring 2026 market will be the real test. If pent-up demand materializes, if interest rates hold or fall further, if economic uncertainty eases, then this gradual tightening could accelerate into genuine recovery.
But if trade tensions escalate, if unemployment rises, if mortgage renewals continue shocking household budgets, this fragile stabilization could reverse.
How Coldwell Banker Horizon Realty Can Help
At Coldwell Banker Horizon Realty, we understand that market inflection points create both opportunities and risks. Whether you're a buyer trying to time your entry, a seller wondering if you should list now or wait for spring, or a homeowner evaluating refinancing options, we provide the expertise and local market knowledge you need to make informed decisions.
Understanding whether the market is truly turning or just pausing requires professional insight from people who track conditions daily and understand the structural forces shaping 2026.
Contact Coldwell Banker Horizon Realty today to discuss how current market dynamics are affecting your area and how we can help you navigate decisions in this transitional period.
The Bottom Line
Canada's housing market posted its sixth monthly sales gain in seven months in October. The sales-to-new-listings ratio tightened modestly. Months of inventory hit its lowest level since January. Prices stabilized.
Those are all positive signs. But they don't yet constitute an inflection point. They represent stabilization after years of decline, with early indicators that recovery may be beginning.
CREA points to interest rates approaching stimulative territory. Borrowing costs have fallen enough to pull hesitant buyers back into the conversation, yet not enough to unleash unchecked demand.
The question is no longer whether buyers will return. The question concerns the scale and confidence of their re-entry. The answer lies in the interplay of policy and economics that will unfold over the next six months.
Spring 2026 will bring a market that advances with restraint rather than excitement. That's probably the most realistic assessment given current conditions. Not a boom, not continued decline. Just a gradual, cautious recovery driven by end-user demand rather than speculation.
Whether that proves true depends on forces beyond any single month's data. Trade policy, population growth, employment trends, and political stability will all shape whether October 2025 was the beginning of a genuine recovery or just another false start in a market that refuses to commit to a direction.
The content of this article is for informational purposes only and should not be considered as financial, legal, or professional advice. Coldwell Banker Horizon Realty makes no representations as to the accuracy, completeness, or suitability of the information provided. Readers are encouraged to consult with qualified professionals regarding their specific real estate, financial, and legal circumstances. The views expressed in this article may not necessarily reflect the views of Coldwell Banker Horizon Realty or its agents. Real estate market conditions and government policies may change, and readers should verify the latest updates with appropriate professionals.
