Canadian Home Sales Edge Up for First Time in 2025, Hinting at Buyer Confidence
In what could be a glimmer of hope for the Canadian real estate market, home sales in Canada saw their first increase of 2025, with a 1.4% rise in May compared to April. This marked a crucial shift, standing 2.3% above the five-year seasonal average. Despite the recent uptick, the market still faces challenges, reflected by a 22.9% decline compared to May 2024. The lingering impact of higher borrowing costs continues to weigh heavily on sales activity.
Market Dynamics
- New Listings: Fresh supply saw a modest rise of 1.1% month-over-month, yet remained 8.6% below the five-year average, contributing to overall inventory levels that hover near historic lows.
- Price Movement: The national average home price experienced a slight dip, falling 0.7% from April to $644,589. However, it remains 1.3% above levels seen last May. Meanwhile, the MLS® Home Price Index (HPI) rose by 0.4% in May compared to April.
Regional Highlights
The Canadian real estate market displayed varying degrees of recovery across different regions in May:
- British Columbia and Atlantic Canada posted the strongest monthly sales gains.
- While major markets such as the Greater Toronto Area (GTA) and Montréal experienced modest increases, several smaller centers continued to report year-over-year declines.
What It Means
After months of declining activity under the pressure of higher interest rates, May’s modest rebound in home sales suggests that buyer confidence may be slowly returning. However, the market faces significant challenges, including tight supply and ongoing affordability issues, indicating that any full-scale recovery will likely be gradual. As buyers and sellers navigate these complex dynamics, stakeholders will be closely watching the market’s response to the evolving economic landscape.
