Canadian Home Sales and Prices Set to Rebound in 2025: What Buyers and Sellers Need to Know
The Canadian real estate market is poised for a rebound in 2025, despite ongoing challenges such as high interest rates, a potential trade war, and evolving immigration policies. According to the latest statistics from the Canada Mortgage and Housing Corporation (CMHC), new housing construction will slow over the next few years but remain above the 10-year average. Here’s what homebuyers, sellers, and investors need to know about the market outlook.
Housing Construction Trends in Canada
The federal government initially predicted that over 500,000 new homes would be under construction per year until 2031. However, the CMHC now forecasts significantly lower numbers:
Fewer than 250,000 new homes will be built in 2025.
Less than 240,000 homes are expected in 2026.
In 2027, construction will drop further to under 235,000 homes.
Despite this slowdown, the construction of detached, semi-detached, and row houses remains strong, particularly in the affordable housing segment.
Affordability Challenges for Homebuyers
Affordability remains a significant concern for Canadian homebuyers. Families like Sandra Mullin’s, who are looking to relocate from Grand Prairie, Alberta, to Ontario, find themselves facing tough decisions due to high home prices and limited options.
“Even if they build those new houses, we would not be able to afford a new build,” Mullin shared, highlighting the struggles of many Canadian families.
This situation forces buyers to widen their search beyond their preferred locations and compromise on factors such as proximity to family or work.
Government’s Response and Policy Changes
The Canadian government is closely monitoring the Canada-U.S. trade relationship, particularly in light of potential economic conflicts that could impact the housing market. The Minister of Housing, Infrastructure, and Communities has stated that they are committed to protecting national interests and ensuring housing remains a priority.
Industry Challenges: Labour Shortages and Supply Chain Issues
Developers are facing a combination of obstacles, including:
Labour shortages, which slow down construction timelines.
Supply chain disruptions, particularly with overseas materials.
High interest rates, making new projects less financially viable.
While the GST/HST holiday has provided some relief for the construction industry, it has not been enough to offset these challenges. Many developers explain that despite government incentives, the cost of new projects remains high, limiting affordability for buyers and renters alike.
What This Means for the Rental Market
The CMHC anticipates higher vacancy rates, which could lead to improved rental affordability in some markets. However, affordability remains a concern in high-cost cities such as Toronto and Vancouver. While some renters may see relief, demand for rental properties is still outpacing supply, meaning significant price reductions are unlikely.
Final Thoughts: What’s Next for the Canadian Housing Market?
For buyers: The slowdown in construction may mean fewer choices, but increased vacancies in the rental market could provide temporary relief for those waiting to purchase.
For sellers: Home prices are expected to rebound, making 2025 a better year for selling compared to the previous downturn.
For investors: The combination of rising vacancy rates and high demand presents a unique opportunity for those looking at the rental market.
As we move through 2025, keeping an eye on government policies, interest rate trends, and economic conditions will be crucial in navigating Canada’s evolving real estate landscape.
