Latest figures suggest affordability challenges are continuing to keep homebuyers sidelined
Home sales slipped across British Columbia in May, falling from the same time last year as the interest rate outlook and affordability challenges continued to weigh against homebuyers.
The British Columbia Real Estate Association (BCREA) said on Thursday that the province saw 6,790 residential unit sales last month, a 2% decline from May 2025, with average residential prices also dropping (by 1.4%, to $945,878).
That marks a fresh sign that potential homebuyers are remaining on the sidelines in an uncertain economic environment, with oil prices continuing to spike due to the war in Iran and the economy showing signs of weakness despite adding 88,000 jobs last month.
Interest rates have also ticked higher in recent weeks, while the Bank of Canada is opting against cuts for now – meaning there’s little sign of a better borrowing outlook anytime soon.
“Rising mortgage rates and a weak labour market continue to constrain activity around the province but especially in the Lower Mainland,” BCREA chief economist Brendon Ogmundson said in remarks accompanying the release.
“The recent rise in mortgage rates presents an unexpected headwind for the market this year and may further delay a recovery in activity.”
The province’s total residential sales dollar volume fell by 3.4% year over year last month, sliding to $6.42 million, while unit sales remain well lower than the 10-year average for May,
While the British Columbia and Ontario markets are still struggling – mainly because of the affordability challenges facing borrowers – the outlook is brighter in other parts of Canada.
Bank of Montreal (BMO) Capital Markets senior economist and director Sal Guatieri told Canadian Mortgage Professional after the Bank of Canada’s Wednesday decision that the national market excluding those provinces was performing well despite the economic challenges.
And Royal Bank of Canada (RBC) also sees some green shoots for the Vancouver market even as BC struggles to gather momentum.
The Vancouver market is still soft – but “early signs of recovery” are showing, the banking giant said in a recent analysis.
Transactions in Vancouver likely rose more than 5% in May compared with the previous month on a seasonally adjusted basis, while inventory is also tightening.
But the bank doesn’t see the recent slide in home prices reversing anytime soon. “We expect the current supply and demand imbalance will keep home values declining ahead,” it said.
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