Canada’s tentative housing recovery hit a snag in August, with national home resales slipping 0.7% month-over-month on a seasonally adjusted basis, according to RBC’s analysis of Canadian Real Estate Association (CREA) data. The pullback ended five straight months of gains and pushed activity back to May levels, as an escalation in the Canada-US trade dispute appeared to unsettle buyer confidence just as more sellers moved to list their properties.
CREA figures cited by mpamag.com showed actual unadjusted sales activity was down 6.9% compared with the same month last year. New listings, meanwhile, rose 3.3% month-over-month, pushing the national sales-to-new-listings ratio down to 49% — still within what RBC economist Rachel Battaglia describes as balanced territory, which should help cushion prices against sharper declines. CREA’s composite price measure was little changed from July, with year-over-year price declines slowing to 3%, continuing a deceleration that has defined the market since January.
Regional Divergence Deepens
Beneath the national headline, Canada’s housing markets continued to split along regional lines. Vancouver, long the country’s softest major market, saw resales tick up in August and cross the 2,000 mark for the first time in nine months, with prices still falling but at a decelerating pace. RBC estimated Vancouver resales rose 8.5% seasonally adjusted from July, alongside a 12% monthly jump in new listings that pushed the local sales-to-new-listings ratio back into buyer-friendly territory. Vancouver remains the weakest of Canada’s six largest markets, a ranking RBC expects to persist through year-end.
Toronto’s recovery faltered after a run of gains: resales fell 1.3% seasonally adjusted in August, snapping an upward streak that had built since March, while the benchmark home price index edged lower from July following small increases in June and July. New listings in Toronto remained down 14% year-over-year, a steeper decline than the 2.1% annual drop in sales, a supply squeeze RBC links partly to depressed condo construction.
Ottawa bucked the softness, with annual growth in the MLS Home Price Index turning positive for the first time in 2026 — a milestone RBC called important, though it cautioned more volatility could follow before annual price gains are firmly established. Montreal saw new listings climb an estimated 7.1% seasonally adjusted from July, part of a gradual easing of inventory through 2026, even as RBC’s affordability measure for the city hovered near an all-time worst. Calgary cooled sharply, with resales down more than 9% seasonally adjusted from July; condo prices there sat 8% below year-ago levels, while detached home prices held up better, down just 1.1% annually. Pockets of seller advantage persisted in Saskatoon, Regina, Winnipeg, Sherbrooke, Saint John and Halifax, though RBC noted that advantage is weakening.
Trade War and Rates Cloud the Outlook
Economists point to the US-Canada trade dispute as the dominant swing factor for the market’s trajectory. Sal Guatieri, director and senior economist at BMO Capital Markets, told Canadian Mortgage Professional the trade war is likely to weigh more heavily on housing than the conflict involving Iran, warning that job-security fears make households hesitant to take on one of the largest financial commitments of their lives. “Until we see some clarity and de-escalation of trade tensions, I think the housing market could remain pretty fragile for a while,” he said, adding that signs of stabilization seen earlier in Ontario and British Columbia could be pushed onto the “back burner” if tensions persist.
The Bank of Canada has held its policy rate at 2.25% since last December, its seventh consecutive hold, even as Consumer Price Index inflation stayed at 3.0% for a second straight month. Drew Donaldson, mortgage broker and principal at Donaldson Capital in Toronto, said he does not expect a prolonged slump despite rising five-year bond yields pressuring fixed mortgage rates, predicting the fall market and fourth quarter would remain busy. He said bond market turmoil tied to US Treasury yields could settle after the US midterm elections, with “more favourable conditions” possible in 2027. “A trade deal with the US would be a huge vote of confidence to our economy,” he said.
The Longer-Term Affordability Problem
Beyond the near-term trade and rate volatility, longer-term structural pressures continue to weigh on affordability. According to the Macdonald-Laurier Institute, the average Canadian home price rose from $163,524 in 2000 to $718,400 in 2025 — a 339% increase — while general inflation over the same period was 55%.
The institute cites CMHC research finding that for every 10% increase in municipal regulatory restrictiveness, housing supply growth falls and home prices rise by 14%. Separate estimates from the C.D. Howe Institute, referenced in the report, found a single detached home in Toronto costs roughly $350,000 more to buy than to build, even allowing for a 17% profit margin, while in Vancouver that gap reaches $1.3 million. In British Columbia municipalities including Abbotsford-Mission, Kelowna and Victoria, the estimated gap ranges from $255,000 to $415,000. The institute notes nine in ten Canadians say they are worried about the state of the country’s housing market.
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