No letup in Canada's housing market gloom as January sales slide

Canada’s housing market opened 2026 on the back foot, as national home sales dropped sharply in January and new listings climbed, widening the gap between buyers and sellers just as a historic winter storm swept southern Ontario.

The Canadian Real Estate Association (CREA) reported that home sales fell 5.8% month over month on a seasonally adjusted basis and 16.2% compared with a year earlier.

New listings rose 7.3%, pulling the national sales‑to‑new‑listings ratio down to 45% from 51.3% in December and nudging months of inventory up to 4.9 – just shy of the five‑month level CREA uses as a marker of balance.

Storm-hit Ontario dragged a fragile national market

CREA senior economist Shaun Cathcart said the pullback was concentrated in central and southwestern Ontario, directly along the path of a major storm in the third week of January.

“The monthly decline in national home sales was driven primarily by less activity in the Greater Golden Horseshoe and Southwestern Ontario, suggesting that the story was probably more about a historic winter storm than a downshift in demand,” Cathcart said.

“Notwithstanding the chilly start to the year, we continue to expect 2026 will ultimately be defined by pent-up demand from first-time buyers finally seeing a chance to enter the market.”

While Ontario led the downturn, markets such as Calgary and Regina posted January sales gains, underscoring how regional performance remained uneven.

Prices eased, but balance held

Price declines stayed modest relative to the drop in activity. The national MLS Home Price Index slipped 0.9% month over month and 4.9% year over year, while the average sale price fell 2.6% from a year earlier to $652,941, with weakness concentrated in Ontario, British Columbia and Alberta.

CREA said there were 140,680 properties listed on Canadian MLS systems at the end of January, up 4.5% annually yet still about 11.4% below the long‑term average for that time of year, keeping months of inventory near the five‑month “balanced” benchmark.

Rates, affordability and what comes next

Cathcart stressed that CREA does not see enough evidence in the January figures to revise its 2026 outlook. “Unless we get another two‑foot snowstorm in the most populated part of Canada, our forecast is for things to improve,” he said.

CREA itself forecast a 5.1% rise in national home sales in 2026, to about 494,500 transactions, after a near‑2% decline the previous year, while acknowledging that tariff‑driven uncertainty has knocked buyers to the sidelines in 2025. 

Still, he indicated that stretched borrowers, especially first‑time buyers, remain cautious.

The Bank of Canada held its policy rate at 2.25% on January 28, keeping borrowing costs well below their 2023 peak but high enough to restrain some would‑be purchasers.

CMP

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