Canadian Homes Sales Drop as CREA Downgrades 2025 Forecast
What’s happening, and not happening, to impact home sales activity.
It seems a rebound in home sales isn’t such a slam dunk after all.
The Canadian Real Estate Association (CREA) recently revised its 2025 housing forecast to adjust for the uncertainty of tariffs and any economic turmoil that may come with it. Looking at the updated quarterly forecast, CREA is accounting for 50,000 less home sales in 2025 than originally forecast (totaling 482,673 residential properties—virtually unchanged from 2024) and the average price of a home to be $30,000 less than originally forecast (hitting an average of $687,898 in 2025).
Of course, there are many factors at play. Shaun Cathcart, CREA’s Senior Economist, said the only other time it has been this difficult to provide forecast updates was the beginning of the COVID-19 lockdowns.
“It’s been a very big change, in a very small amount of time,” Cathcart said on the CREA Housing Market Report (available below).
Before we get into looking ahead, let’s look at the main housing data points from March:
- National home sales fell 4.8% in March compared to February.
- The number of newly listed properties moved 3% higher on a month-over-month basis.
- The MLS® Home Price Index (HPI)— the most advanced and accurate tool to gauge a neighbourhood’s home price levels and trends—dropped 1% month-over-month and is down 2.1% on a year-over-year basis.
Canadian home sales continue to fall due to economic uncertainty
To put things into perspective, home sales in March hit a level Canada hasn’t seen since the 2008 financial crisis.
“Up until this point, declining home sales have mostly been about tariff uncertainty. Going forward, the Canadian housing space will also have to contend with the actual economic fallout,” Cathcart said in a CREA media release.
Ontario and British Columbia were hit hard with declining home sales, but for the most part, sales are down all over Canada. Since November 2024, national home sales are now down 20%.
More Canadians are listing their homes these days, too, as new supply jumped 3% in March compared to February. This is helping to ease market conditions, with a sales-to-new-listings ratio falling to 45.9%.
The long-term average for the national sales-to-new listings ratio is 54.9%. Remember, anything below 45% is consistent with buyers’ market territory—with more selection and fewer sales, this brings more choice and leverage for buyers.
Home prices continue to slide
The National Composite MLS® HPI had its largest month-over-month drawdown since November 2023, falling 1%.
British Columbia and Ontario’s Greater Golden Horseshoe is where prices fell, while most of the Prairies, Quebec and the East Coast saw a rise. Check out the chart below for a provincial breakdown.
The non-seasonally adjusted national average home price was $678,331 in March 2025, down 3.7% from March 2024.
CREA revises its 2025 housing forecast
When CREA first released its housing forecast for 2025 in January, it was expected Canada would be breaking away from the “flat as a pancake” housing trend. We previously stated the ingredients were there for a noteworthy and active spring, but then the actions from the President of the United States began to influence Canada’s economic strategy—not to mention the confidence of would-be buyers.
It’s important to note CREA’s forecasts don’t take into consideration any external factors until they’re policy. As of now, tariffs have been implemented and are still impacting the world trade scene, leading to CREA’s revision.
In terms of home sales, CREA is now forecasting the same amount of sales in 2025 as 2024, with gains being seen the most in Newfoundland and Labrador, Quebec, and Prince Edward Island. Sales are projected to decrease in Ontario and British Columbia.
In terms of prices, New Brunswick, Newfoundland and Labrador, and Alberta will see the highest jumps, with prices expected to decline in Ontario and British Columbia, contributing to a decrease in the national sale price by 0.3%.
“While the trend of falling monthly sales has been observed across Canada over the last few months, there are still many regions where sales are high, inventory is near record lows, and prices are rising,” said Valérie Paquin, newly installed Chair of CREA’s 2025-2026 Board of Directors and a REALTOR® based out of Blainville, Quebec. “There are also parts of the country with historically low sales and the highest inventory levels in a decade or more. If you’re looking to buy or sell a property in 2025, you’ll need to understand the market where you are, so contact a REALTOR® in your area today.”
Bank of Canada pauses interest rate cuts
After seven straight interest rate cuts, the Bank of Canada decided Wednesday, April 16, to stay the course.
The Bank’s policy interest rate will remain 2.75%—marking the first time in more than a year the interest rate didn’t move.
Canadian homeowners and potential buyers have been benefiting from a stream of rate cuts that helped make buying a home more attainable and made payments less expensive for those on variable mortgages. At the beginning of April 2024, the policy rate was 5%.
The Bank noted the uncertainty and unpredictability of tariffs from the United States are front and centre when considering the difficulty in projecting economic growth and inflation. The Bank did, however, present two scenarios in its April Monetary Policy Report (MPR) examining different paths for U.S. trade policy.
Under the first scenario where uncertainty remains high but tariffs are limited, the Bank sees Canadian Gross Domestic Product (GDP) weakening temporarily while inflation remains around its 2% target.
In the second scenario, under a protracted trade war, Canada’s economy would fall into a recession in 2025 and inflation would rise above 3% in 2026. The Bank mentioned there were other possible scenarios and there was a high degree of uncertainty regarding any forecasts, “since the magnitude and speed of the shift in U.S. trade policy are unprecedented.”
In its closing notes, the Bank stated that its focus would remain on price stability for Canadians, paying particular attention to the following risks and uncertainties:
- the extent to which higher tariffs reduce demand for Canadian exports;
- how much this impacts business investment, employment and household spending;
- how much and how quickly cost increases are passed on to consumer prices; and
- how inflation expectations evolve.
The Bank of Canada will make its next scheduled interest rate announcement on June 4, 2025, and publish its full outlook for the economy and inflation in its next Monetary Policy Report on July 30, 2025.
