Waiting for Spring
Canada’s housing market remained very quiet through February, with weak demand conditions and a low-volume period of the year working together to keep activity suppressed. Bigger picture, the market continues its long and slow downturn, with conditions still varying by region and market segment. We await the spring market for a better indication of if the market will tighten up in 2026.
Existing home sales fell 1.3% in seasonally-adjusted terms in February, and were down 8.1% from year-ago levels. Tough winter weather has probably played a role to start the year, but that shouldn't distract from soft underlying demand. New listings also fell 3.9% in the month, and were still down 3.8% from a year ago. That lifted the sales-to-new listings ratio to 47.6%, reflecting still-balanced overall national conditions. When the market eventually awakens for spring, there will no doubt be some pent-up demand, but also likely a wave of pent-up listings that didn't sell since the fall. How those two sides interact will determine if the market can tighten up through the rest of the year.
The national benchmark price slipped again, and was down 4.8% y/y in February. From the February 2022 high, that now leaves prices down 20% nationally (almost 30% in inflation-adjusted terms).
Southern Ontario is still the weak spot, especially in the new condo space. New condo sales have all but dried up and investors are absent. Apartment prices are faring worse than single-family, but the latter are still getting pressured by an affordability adjustment. Vancouver and some other markets across B.C. remain soft with elevated inventories, and January/February numbers were particularly poor. Calgary has softened as well and is no longer escaping the wider correction. Sales in the city are down and prices have slipped 2.7% from a year ago. Markets in Quebec and most of Atlantic Canada, still lean in favor of sellers, driving continued price gains.
In a separate release (March 16th), Canadian housing starts rebounded to 251k annualized units in February, leaving the 12-month average at a still-strong 261k. Behind the sturdy headline, a collapse in new condo sales (especially in B.C. and Southern Ontario) is weighing heavily on starts in that segment. Suffice it to say that, as current projects reach completion, there will be little in the construction pipeline for 2027 and 2028. However, headline start numbers remain propped up by the purpose-built rental segment, but that too should eventually cool given market signals (i.e., falling rents) on the ground today.