Canada’s housing market ended 2025 on weaker footing than the year before, raising concerns that the correction is not finished. New data from the Canadian Real Estate Association (CREA) shows home prices fell sharply in December, alongside declining sales and one of the strongest late-year surges in listings on record.
Rather than signaling stabilization, the combination of falling prices, weaker demand, and rising supply suggests the market may be entering a second leg of its housing correction.
Home Prices Resume a Steeper Downward Trend
The benchmark price of a typical Canadian home fell 0.7% in December, or roughly $4,800, bringing the national benchmark to $660,300. That single month accounted for nearly 20% of the total annual price decline.
On a year-over-year basis, benchmark prices ended 2025 4.0% lower, down approximately $27,400 from December 2024. December also marked the fourth-largest price drop for the month in the past 20 years, trailing only declines seen during the 2008 financial crisis, the 2022 rate shock, and the 2023 downturn.
Prices have now declined for seven consecutive months, reversing much of the progress seen earlier in the year.
Prices Down More Than 20% From the Peak
Since reaching an all-time high in early 2022, Canadian benchmark home prices have fallen 21.6%, a decline of approximately $181,600. As of December 2025, prices sit at their lowest level in nearly five years, effectively erasing a large portion of the pandemic-era gains.
While earlier stabilization led some observers to suggest a recovery was underway, the renewed decline indicates that downward pressure has re-emerged.
Home Sales Remain Weak by Historical Standards
Sales activity slipped modestly in December and continues to lag longer-term benchmarks.
CREA reported 26,077 residential sales in December 2025, down 4.5% year-over-year. While this was the second-strongest December of the past four years, it remained below 2019 levels, despite Canada’s significantly larger population today.
That gap highlights how affordability constraints and higher borrowing costs continue to suppress demand.
Sellers Are Listing in Unusual Numbers for December
One area showing strength is supply.
Canada recorded 28,899 new listings in December, up 0.8% from a year earlier. Excluding the unusual pandemic conditions of 2020, this represents the second-highest December listing count in at least eight years.
Winter listings are typically muted, suggesting that some sellers may be feeling pressure to exit sooner rather than waiting for the spring market, particularly in investor-heavy regions such as Toronto and Vancouver.
Market Adjustment Extends Beyond Major Cities
While large urban markets remain under the greatest pressure, the adjustment is not confined to Canada’s biggest cities.
Following years in which investors played an outsized role in driving demand, affordability constraints have sidelined many end-user buyers. With fewer households able to absorb current prices, values may continue to drift lower until demand realigns with household budgets or investor participation returns.
What This Means for the Canadian Housing Market
Canada’s housing market did not finish 2025 on stable ground. Falling prices, subdued sales, and elevated listing activity suggest the correction that began in 2022 may be entering a renewed phase rather than concluding.
Until affordability improves or demand meaningfully strengthens, pricing pressure is likely to remain tilted to the downside heading into 2026.
References
Canadian Real Estate Association. (2026). MLS Home Price Index and sales statistics: December 2025. https://www.crea.ca/housing-market-stats/
Better Dwelling. (2026, January 15). Canadian real estate losses grow as correction enters second leg. https://betterdwelling.com/
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