After nearly two years of price declines and cooling activity, Canada’s housing market may finally be stabilizing. Home prices rose slightly for the second straight month in May, and buyer sentiment is cautiously improving. But is this the beginning of a sustainable recovery—or a temporary reprieve before more turbulence?
Home Prices and Sales Rebound Modestly
According to the Canadian Real Estate Association (CREA), the national average home price climbed 2.1% year-over-year in May 2025, marking the first positive annual growth since 2023. Sales volumes were also up 4.7% month-over-month, led by activity in Toronto, Vancouver, and Calgary.
Mortgage rate cuts from the Bank of Canada—down to 2.75% from 5.00% a year ago—have begun to ease affordability pressures, though variable-rate borrowers still face elevated monthly payments.
Regional Differences Remain Stark
Recovery is uneven across the country:
- Ontario & B.C. are seeing renewed bidding wars in some suburbs
- Prairies & Atlantic Canada remain soft, with high inventory levels
- Quebec has held relatively steady due to tighter supply constraints
CREA forecasts national home prices will rise 4.5% in 2025, but many economists warn of possible corrections in overheated micro-markets.
Supply Still a Long-Term Challenge
Housing supply remains a structural issue. Canada is short an estimated 3.5 million housing units by 2030, according to CMHC. While the federal government has ramped up housing starts and zoning reforms, most experts agree the pace is not enough to meet demand from immigration and population growth.
Investor and Foreign Buyer Trends
Investor activity has cooled substantially, with many landlords offloading properties amid rising taxes and stricter short-term rental rules. Foreign buyers, restricted by federal legislation until at least 2027, remain on the sidelines.
The Outlook
Experts are divided. RBC sees “a soft landing already in motion,” while Scotiabank suggests the recovery may stall if economic growth slows in H2 2025. With the next BoC rate decision looming and inflation ticking upward again, volatility could return.
Conclusion
Canada’s housing market may have found its floor—but it’s far from a broad-based rebound. For homebuyers and investors, the key in 2025 will be navigating regional trends and interest rate trajectories, not chasing national averages.
Marc has been involved in the Stock Market Media Industry for the last +5 years. After obtaining a college degree in engineering in France, he moved to Canada, where he created Money,eh?, a personal finance website.