Trade tensions continue cooling most markets while regional pockets show surprising strength.
The spring market delivered a tale of two countries: major urban centers from Vancouver to Toronto faced buyer's markets with declining sales and softening prices, while Montreal and Western cities demonstrated resilience. Despite Bank of Canada rate cuts bringing borrowing costs down significantly, uncertainty around U.S. tariff implementation kept many buyers on the sidelines across Canada's largest markets.
For comprehensive coverage of recent market shifts, see our April 2025 market analysis and insights on Trump's tariff impacts on Canadian real estate.
This market shift represents the most significant rebalancing since the pandemic's early months.
Sales volumes declined in seven of Canada's ten largest metros, yet price movements varied dramatically by region. The national sales-to-new-listings ratio hit 47%—firmly in buyer's market territory, while inventory climbed to levels not seen since the mid-2010s.
For buyers, this means choice and negotiating power. For sellers, it demands strategic pricing and patience.
Immigration policy changes targeting 5% population growth caps by 2026, combined with trade disruption fears, have fundamentally altered demand dynamics. Yet beneath these headwinds lie pockets of strength: Montreal's francophone appeal, Calgary's energy sector recovery, and Ottawa's government employment stability continue driving localized demand. The market's next six months hinge largely on trade resolution and whether rate cuts can overcome economic uncertainty.
Toronto stumbles through spring market weakness
Toronto's housing market delivered its weakest spring performance in nearly a decade, with 6,244 sales in May representing a 13.3% year-over-year decline. The Greater Toronto Area now firmly sits in buyer's market territory, with active listings reaching 27,386 units, the highest level since May 1996. This inventory surge, up 51% from last year, has fundamentally shifted negotiating power toward purchasers.
Average selling prices dropped 4% annually to $1,120,879, with the most pronounced declines hitting condominiums. Condo apartments fell 6.9% year-over-year to average $678,000, reflecting oversupply from pre-construction completions and investor selling pressure. Detached homes showed more resilience but still declined, averaging $1.43 million across the GTA.
The sales-to-new-listings ratio plummeted to 30%, creating conditions where homes sold for 1% below asking price on average, a stark reversal from the bidding wars of 2021-2022. Days on market increased to 33 days, giving buyers time to conduct inspections and negotiate terms. For Toronto-area buyers, this represents the best purchasing environment in over five years. Sellers face the reality of competitive pricing and longer marketing periods, particularly for properties priced above $1.5 million where luxury inventory has accumulated.
Source: Toronto Real Estate Board Market Watch and BNN Bloomberg. For detailed condo market analysis, see our Toronto condo market update.
Vancouver Real Estate hits decade-low sales amid record inventory
Metro Vancouver's real estate market posted its most challenging May in a decade, with 2,228 sales representing an 18.5% year-over-year decline. More significantly, sales fell 30.5% below the ten-year seasonal average, placing Vancouver among Canada's weakest major markets. The sales-to-active-listings ratio of 13.4% indicates severe downward pricing pressure, particularly for detached homes at just 10.2%.
Benchmark prices declined 2.9% annually to $1,177,100, marking the fourth consecutive month of price declines across most property types. Detached homes led the downturn with prices falling 3.2% to $1,997,400, while condominiums showed relative resilience with a 2.4% decline to $757,300. This pricing pressure reflects active inventory reaching 17,094 units—a ten-year high representing 45.9% above seasonal norms.
Vancouver's market psychology has shifted dramatically from the fear-of-missing-out mentality to wait-and-see caution. Trade uncertainty with the United States, combined with federal election outcomes, has buyers questioning major purchase timing. For Vancouver purchasers, the market offers unprecedented choice and negotiating leverage. Sellers must adjust expectations significantly, with many properties requiring 60-90 days on market compared to the 30-day norm of recent years.
Source: Greater Vancouver REALTORS® Statistics and Mike Stewart Real Estate
Montreal Real Estate bucks national trend with seller's market strength
Montreal defied national cooling trends with 4,563 sales in May, up 4% year-over-year, positioning it among Canada's strongest major markets. The sales-to-new-listings ratio of 66% indicates robust seller's market conditions, with 14% of single-family sales involving competitive bidding. Quebec's real estate sector continues benefiting from relative affordability compared to Toronto and Vancouver, combined with francophone immigration preferences.
Average resale prices climbed 8.2% annually to $574,900, with single-family homes leading gains at 9.2% to $680,200. Even condominiums, struggling in most Canadian markets, advanced 5.4% to $427,000. Montreal's price appreciation significantly outpaced national trends, supported by construction activity remaining 25% below peak levels and sustained immigration-driven demand.
The North Shore led regional activity with 13% sales growth, accounting for 25% of all Montreal transactions. South Shore markets now command higher median prices than Laval ($634,000 versus $600,000 for single-family homes), reflecting buyer willingness to commute for value. Montreal buyers face competitive conditions requiring pre-approvals and quick decision-making. Sellers benefit from pricing power and faster transactions, though realistic pricing remains essential given increased inventory from new construction completions.
Source: QPAREB Market Report and Nesto Montreal Market Analysis
Calgary transitions toward market balance
Calgary's real estate market experienced a fundamental shift in May, with 2,568 sales declining 17% year-over-year while inventory nearly doubled to 6,740 units. The sales-to-new-listings ratio of 53% places Calgary in balanced market territory—a significant change from the intense seller's market conditions of 2022-2024.
Benchmark prices reached $589,900, down 2.5% annually. Calgary's first annual decline since 2020. However, average prices rose 6% to $649,268, reflecting a shift toward higher-priced transactions as buyers gain negotiating power in the luxury segment. Detached homes maintained modest gains at $769,400 benchmark pricing, while townhouses and condominiums experienced steeper declines.
Oil price volatility and trade uncertainty with the United States continue influencing market psychology, despite Alberta's record production exceeding 4 million barrels daily. Unemployment rose to 7.4% while the province projects 8.1% revenue decline—the largest single-year contraction in 30 years. Calgary buyers benefit from doubled inventory levels and reduced competition. Sellers must adapt to longer marketing periods and competitive pricing, particularly for properties above $700,000 where inventory has accumulated most significantly.
Source: Calgary Real Estate Board (CREB®) and Justin Havre Market Update
Ottawa Real Estate demonstrates government employment resilience
Canada's capital region posted 2,092 sales in May, up 3.4% year-over-year, demonstrating relative stability amid national market weakness. Ottawa's diversified economy anchored by government employment continues providing housing market support, with the city posting positive price growth while most Ontario markets declined.
Average prices rose 4.5% annually to $721,656, significantly outperforming the broader Ontario market where prices fell 4.5%. Single-family homes advanced 3.6% to $815,951, while condominiums remained essentially flat with a minor 0.2% decline to $469,479. The sales-to-new-listings ratio of 50% indicates balanced market conditions providing opportunities for both buyers and sellers.
Active inventory increased 54.2% to 4,878 units, representing 3.7 months of supply compared to 2.2 months last year. This inventory growth has eliminated the bidding war pressure of recent years while maintaining reasonable price appreciation. Ottawa buyers enjoy improved selection and negotiating opportunities without the extreme competition seen in Toronto. Sellers benefit from steady demand but must price competitively given increased inventory levels.
Source: Ottawa Real Estate Stats and Nesto Ottawa Housing Market
Western Canada shows mixed performance patterns
Edmonton led Western Canadian price appreciation with record benchmark pricing of $518,500 for detached homes, up 11% annually. Townhouses surged 16% while condominiums gained 15%, reflecting continued in-migration from higher-cost centers. However, sales declined 8% year-over-year despite this price strength, as new listings hit record levels of 4,915 properties.
Winnipeg emerged as Canada's strongest seller's market with a 69% sales-to-new-listings ratio and 8% sales growth to 1,523 units. Average prices rose 3.5% to $409,356, supported by limited inventory and steady population growth. Saskatchewan showed similar strength with 6.4% price appreciation.
The region benefits from relative affordability and economic diversification beyond natural resources. Alberta's projected 2.5% annual economic growth over five years supports continued housing demand, while immigration policies favor skilled trades workers needed for construction. Western Canadian buyers face increasingly competitive conditions in major centers but benefit from affordability compared to Eastern markets.
Sellers enjoy favorable conditions but must recognize the transition toward more balanced market dynamics.
National economic headwinds shape market direction
The Bank of Canada held its overnight rate at 2.75% on June 4, pausing after seven consecutive cuts that reduced rates from their 5% peak. Governor Tiff Macklem cited U.S. trade policy uncertainty as the primary factor, with 25% tariffs on most Canadian goods creating economic disruption fears. The central bank characterized trade conflict as "the greatest threat to the Canadian economy."
National average home prices declined 0.3% to $687,898, with the Canadian Real Estate Association dramatically revising 2025 forecasts downward from 8.6% growth projections to essentially flat activity. Sales volumes are projected at 482,673 transactions—unchanged from 2024 despite rate cuts providing affordability relief.
Immigration policy changes targeting 5% population growth caps by 2026 are expected to reduce housing demand by 670,000 units through 2027. Combined with $155 billion in Canadian counter-tariffs, the economic environment creates uncertainty about employment, purchasing power, and market direction through the remainder of 2025.
Source: Bank of Canada Rate Decision, CREA Market Forecasts, and Government Immigration Policy. Read our analysis on election impacts and tariff effects.
Conclusion: divergent paths ahead
May 2025 marked a definitive shift toward buyer-favourable conditions across Canada's largest urban markets, while regional centers demonstrated surprising resilience. The combination of trade uncertainty, policy changes, and inventory normalization has created the most complex market environment since the early pandemic period.
For buyers, current conditions represent the best opportunities in years across Toronto, Vancouver, and Calgary markets. Increased inventory, reduced competition, and negotiating power provide advantages not seen since 2019. However, economic uncertainty requires careful consideration of employment stability and regional economic factors.
For sellers, success now demands strategic pricing, professional presentation, and realistic timeline expectations. The days of receiving multiple offers above asking price have ended in most markets, replaced by longer marketing periods and price negotiations. Properties priced competitively for current conditions continue attracting offers, while overpriced inventory accumulates.
The market's trajectory through summer and fall 2025 depends heavily on trade resolution with the United States and whether interest rate cuts can overcome economic uncertainty. Regional divergence suggests successful navigation requires understanding local economic factors rather than relying on national trends.
For additional market insights, explore our coverage of rental market trends, political impacts on housing policy, and U.S. election effects.
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