January sales rise, but market experts warn of trade-related economic risks
Toronto’s real estate market saw a strong start to 2025, with home sales rising 10% in January as buyers responded to lower mortgage rates. However, industry experts warn that trade uncertainties, including potential US tariffs, could curb momentum in the months ahead.
The Toronto Regional Real Estate Board (TRREB) reported 5,971 home sales in January, 10% higher than in December. A surge in new listings, up 26% month over month, contributed to the market’s supply growth, while the average home price remained stable at $1,089,300.
TRREB expects total sales in 2025 to be 12.4% higher than in 2024, citing a growing number of buyers re-entering the market as borrowing costs decline. Since June, the Bank of Canada has implemented six rate cuts, reducing the average five-year fixed mortgage rate to just over 4%, down from about 5% a year ago.
“A growing number of homebuyers will take advantage of lower borrowing costs,” TRREB chief market analyst Jason Mercer said in a media release.
However, he cautioned that “the positive impact of lower mortgage rates could be reduced, at least temporarily, by the negative impact of trade disruptions on the economy and consumer confidence.”
The potential for economic disruption stems from ongoing trade tensions between Canada and the US. On February 1, US President Donald Trump announced a 25% tariff on most Canadian imports, set to take effect on February 6. However, following last-minute talks with Prime Minister Justin Trudeau, the White House postponed the tariffs for 30 days.
While the full impact of the tariff threat remains unclear, some experts say it could weigh on consumer confidence and dampen homebuying activity.
“The natural feeling is that most people will be very cautious and afraid to make a big purchase,” said Victor Tran, a mortgage and real estate expert at Ratesdotca.
Read next: Calgary home sales fall, but market activity remains above average: CREB
Despite the uncertainty, TRREB remains optimistic about price growth in 2025. The board forecasts a 2.6% rise in the average home price, with single-family homes expected to see steeper gains than condominiums.
“Lower borrowing costs coupled with ample supply will improve affordability and prompt more buyers to move off the sidelines,” TRREB stated in its report.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
