December Home Sales Dip; 2025 Could See ‘Unleashing of Pent Up Demand’
As expected, Canadian home sales took a dip to close out 2024.
Home sales slumped 5.8% in December compared to November, following a resurgence in the fall. Despite the drop, Canadian home sales activity remained up 13% compared to May, and the last quarter of 2024 stood out as one of the most active over the last 20 years (not including the pandemic).
Now, if you believe a downward trend is about to form, you may want to think again, says Shaun Cathcart, Senior Economist with the Canadian Real Estate Association (CREA).
In the latest Housing Market Report, Cathcart revealed the latest update to CREA’s 2025 housing market forecast.
“We expect a significant unleashing of pent up demand this year. After years of record population growth, it’s all sitting there,” Cathcart said in the report (available to watch below).
Diving into the December Housing Data
Before we look ahead, it’s important to see where we currently stand.
Yes, home sales are down, but so, too, are the number of newly listed properties—in December, new listings were down 1.7% compared to November. This is the third straight month of declines in that department.
There were 128,000 properties listed for sale at the end of 2024, up 7.8% from a year earlier but still below the long-term average of around 150,000 listings.
As the formula often goes, less inventory can lead to higher prices, especially when there is high demand—and that’s what we’re starting to see at a national level. The MLS® Home Price Index—an exclusive tool REALTORS® use to most accurately gauge home price levels and trends—was up 0.3% month-over-month. This marks the second consecutive month of increases after “a period where prices were basically (flat) for possibly the longest period in history,” according to Cathcart.
Canadian Home Sales and Prices to Rise in 2025
We’re beginning to break out from the flatness. How active will Canadian real estate markets get, though? The ingredients are there for a noteworthy spring, although not as dizzying as those early stages of the pandemic.
In addition to lower mortgage rates, the expectation the Bank of Canada may soon signal that interest rates are about as low as they are likely to go in this easing cycle could spur even more demand from those who have been waiting for the right time to lock in a popular fixed-rate mortgage (the Canadian Mortgage and Housing Corporation states 69% of new mortgages were fixed-rate mortgages in 2024).
CREA says markets will react differently to the increased demand. British Columbia and Ontario are expected to see bigger rebounds on the sales side and less scope for price gains in these already expensive parts of the country, while Alberta and Saskatchewan have much more room to grow on the price side.
Manitoba, Quebec, and the Atlantic provinces are all expected to fall between these extremes, with both more sales and higher prices in 2025.
Below is CREA’s updated price forecast.
Of course, there are external factors that could have major impacts on the forecast—the outcome of a federal election and possible tariffs imposed by U.S. President Donald Trump, for instance—but as Cathcart notes, forecasts don’t take these into account until they become policy.
As of today, CREA is forecasting 532,704 residential to trade hands in 2025, representing an 8.6% increase from 2024. The national average home price is forecast to climb by 4.7% on an annual basis to $722,221 in 2025.
“While housing market activity may take a breather over the winter with fewer properties for sale, the fall market rebound serves as a good preview of what could happen this spring,” said James Mabey, CREA’s Chair and a REALTOR® in Edmonton, Alberta. “Spring in real estate always comes earlier than both sellers and buyers anticipate. The outlook is for buyers to start coming off the sidelines in big numbers in just a few months from now, so if you’re looking to buy or sell a property in 2025, contact a REALTOR® in your area and start getting ready today.”
