Higher sales activity looks unlikely to arrive unless a US-Canada trade deal is struck
As 2025 nears its halfway point, Canada’s housing and mortgage markets have hit none of the heights hoped for at the beginning of the year.
The main reason for that is no secret: massive economic uncertainty sown by the US-Canada trade war, launched by Donald Trump in February through huge tariffs on Canadian imports crossing the border.
That’s plunged the national economy into crisis, raised fears of a sharp downturn, and sent would-be homebuyers scurrying to the sidelines amid the growing prospect of mounting job losses.
Just last week, TD Bank’s chief economist Beata Caranci said the economy could shed a further 100,000 jobs this year with no end in sight to the ongoing trade tensions.
While sales have plummeted and prices are sliding across most markets compared with the same time in 2024, some buyers with secure jobs who previously saw no chance of purchasing a home are finding opportunity in the current climate.
That’s because of moderating prices and lower borrowing costs thanks to Bank of Canada interest rate cuts over the past 12 months according to RE/MAX Canada’s area vice president Kingsley Ma.
“We’re looking into a market where overall prices have softened and inventories are up because of slow activity due to uncertainty surrounding the tariff situation,” he told Canadian Mortgage Professional. “Even though interest rates are lower than in 2024, buyers are hesitant to invest in a home as they’re concerned about their jobs due to economic uncertainties ahead.
“In light of this, the current market can still provide opportunities for buyers who’ve saved for a downpayment and are confident about their job security to enter the market, as there is a healthy selection of inventory to choose from with a more favourable interest rate.”
Canada's housing market continued its cooling trend in April, with prices falling across 68% of monitored cities. The Teranet–National Bank House Price Index shows a 2.4% decline since December 2024, with Ontario heavily impacted.https://t.co/lsdQQZLKbK
— Canadian Mortgage Professional Magazine (@CMPmagazine) May 21, 2025
Canada’s 2025 housing market outlook varies from one city to the next
Steep slowdowns in the Toronto and Vancouver markets have grabbed headlines this year, with Toronto’s condo crisis a fiasco that could still have a long way to run.
But there are still pockets of the country where activity has remained robust, Ma said – including, unsurprisingly, two Prairies cities seeing huge interest from buyers outside Alberta.
“Edmonton and Calgary, unlike most cities in Canada, have experienced a lot of activity over the last year plus,” he said. “This is mainly due to the lower price of entry, high liveability, and migration into those cities. Affordability is still very important to the consumers.”
In April, Calgary sales were in line with historical trends for the month despite sliding 22% from the red-hot pace set in 2024, while detached, semi-detached, apartment and row prices all inched upwards.
Residential sales also fell in the Greater Edmonton Area (GEA) year over year in April, although they jumped by 9% compared with March as sales surged by the same percentage compared with 12 months prior.
Homebuyers unlikely to see a rapid decline in mortgage rates
Stubborn core inflation means odds of a Bank of Canada rate reduction in June have fallen, while bond yields jumped last week and ticked fixed mortgage rates higher.
But while there might be no relief on the way on the rate front, Ma said Canada’s housing market could still warm up in the second half of the year – if positive news emerges on the trade war.
Prime minister Mark Carney, fresh from steering the Liberal Party to a strong minority in April’s federal election, visited the White House for a meeting in early May widely viewed as having ratcheted down some of the US-Canada trade tensions.
Still, there remains no deal in place on a new trading relationship, and Ma said a housing market revival largely depends on the pace of that progress. “It’s difficult to speculate what lies ahead for our economy,” he said.
“However, if the tariff situation settles in the next few months and with many buyers sidelined because of it, the tables can quickly turn and more activity will take place, which can lead to a buyer’s market in most cities.”
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