The Canadian Real Estate Association (CREA) has significantly lowered its housing market forecast for 2025 and 2026, citing growing economic uncertainty and the fallout from escalating tariffs.

The updated forecast, released Thursday, replaces a more optimistic projection issued in January.

CREA now expects 482,673 residential properties to trade hands in 2025 — a near-flat figure, representing a 0.02% decline from 2024. This marks a sharp downgrade from the 8.6% increase projected earlier this year. Meanwhile, the national average home price is forecast to edge down 0.3% to $687,898, nearly $30,000 lower than January’s estimate.

The revised forecast has widespread implications for condominium sales and development projects.

“Up until this point, declining home sales have mostly been about tariff uncertainty,” said Sean Cathcart, CREA’s senior economist. “Going forward, the Canadian housing space will also have to contend with the actual economic fallout. In short order we’ve gone from a slam dunk rebound year to treading water at best.”

CREA’s revision represents the largest in-between-quarter adjustment to its forecast since it began publishing them during the 2008–2009 financial crisis. The association cited “unprecedented levels of uncertainty,” including unclear interest-rate trajectories and the threat of stagflation, as key reasons for the dramatic revision.

Looking ahead to 2026, CREA projects home sales will rise modestly by 2.9% to 496,487 units, still falling short of the 500,000 mark for a fourth consecutive year. The national average home price is expected to increase slightly by 1.2% to $696,074.

The updated forecast comes amid continued weakness in the housing market. In March 2025, actual (non-seasonally adjusted) home sales fell 9.3% year-over-year — the lowest March sales total since 2009. The national average home price also dropped 3.7% from March 2024 to $678,331.

On a seasonally adjusted basis, national home sales declined 4.8% month-over-month in March, marking the fourth straight monthly decline. Sales are now down 20% from their recent peak in November 2024. The number of newly listed properties rose 3% from February, driving the national sales-to-new listings ratio down to 45.9% — its lowest level since February 2009. The long-term average for this ratio is 54.9%.

“While the trend of falling monthly sales has been observed across Canada over the last few months, there are still many regions where sales are high, inventory is near record lows, and prices are rising,” said Valérie Paquin, chair of CREA’s 2025-26 board of directors. “There are also parts of the country with historically low sales and the highest inventory levels in a decade or more.”

At the end of March, there were 165,800 properties listed for sale, up 18.3% from a year earlier but still below the long-term average of 174,000 listings. The months of inventory climbed to 5.1, the highest level since early in the pandemic, nearing the long-term average of five months.

The MLS Home Price Index (HPI) declined 1% from February to March — the sharpest monthly drop since November 2023 — and was down 2.1% compared to a year earlier. Price softening was most pronounced in Ontario and B.C., while prices continued to rise in parts of the Prairies, Quebec, and Atlantic Canada.

With a weakening economy and cautious buyers, CREA’s revised outlook suggests Canada’s housing market faces a slower and more uneven recovery than previously anticipated.

Pictured: Condominium for sale in Vancouver.

Photo: Condos.ca