Canada’s June housing numbers reveal a market that remains ‘stagnant,’ say economists

Houses in a residential neighbourhood in Montreal, Que. Photo by Getty Images/iStockphoto

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Canada’s housing market perked up again in June, with sales rising from May after declining at the end of last year through to April, but economists don’t think the market is out of the woods just yet.

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National home sales rose 2.8 per cent in June from May, according to the Canadian Real Estate Association (CREA) on Tuesday, after rising 3.6 per cent in May from April. CREA said sales have “rebounded” 17.3 per cent since April.

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Prices, however, were essentially flat in June from May and down 1.3 per cent from a year ago and listings at the end of June were up 11.4 per cent from a year ago.

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Here’s where economists think the Canadian housing market is headed for the rest of the year.

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‘Bearish’ psychology: BMO

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“Canada’s housing market remains stagnant,” Robert Kavcic, a senior economist at BMO Capital Markets, said in a note, basing his opinion on “subdued sales activity, solid new listings flow and falling prices.”

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He said the improvement in sales was because sellers backed down on seeking prices reminiscent of the hot housing days of 2022.

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But he thinks there are three things holding back the housing market from fully rebounding, including ongoing uncertainty from the trade war, mortgage rates of approximately four per cent “are not low enough to improve the affordability calculus in a demand-sparking way” and “market psychology appears bearish,” meaning buyers, who are expecting prices to fall, are holding back from purchasing.

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Southern Ontario, including cities such as Toronto, Kitchener-Waterloo and Barrie, was a “weak spot,” with a condo glut pushing prices down and single-detached prices falling as well.

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Sales in Calgary fell 18 per cent, a major turnaround from a few years ago when that market was overheated.

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‘Small positive step’: Oxford Economics

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“The resale housing market took another small positive step in June, but it will likely return to the doldrums if a trade deal isn’t reached by the new Aug. 1 deadline when the U.S. threatens to hike tariffs on Canada to 35 per cent,” Tony Stillo, director of Canada Economics at Oxford Economics Ltd., said in a note.

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Despite three months of gains in home sales, he said the market has a hill to climb, with activity still 14 per cent below the five-year average.

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Furthermore, the multiple listings service (MLS) benchmark home price was down in June for the seventh straight month and the benchmark price has shrunk almost 18 per cent from its high in February 2022.

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“Unless a deal is reached to immediately reduce U.S. tariffs, Canada’s resale housing downturn could extend into 2026,” Stillo said.

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Oxford forecasted that a recession brought on by a trade war could result in 140,000 layoffs, more distressed selling of homes and reduced demand, which could push home prices lower.