Oxford Economics saw a sluggish first half for resales before a mid‑year turning point
Canada’s resale housing market entered the new year under a cloud of trade uncertainty, with Oxford Economics warning that weaker employment prospects and a shrinking population would keep many buyers sidelined and push prices lower in key markets.
Job insecurity tied to the ongoing trade war is expected to weigh on confidence even as mortgage rates stay comparatively favourable for qualified borrowers.
In commentary on December resale data from the Canadian Real Estate Association (CREA), Tony Stillo, director of Canada economics at Oxford Economics, said the market “fell into a slumber” over the holidays, with sales declining for a second straight month and new listings falling for the fourth, while prices “continued to drift downward amid a still plentiful supply.”
Stillo added that “job insecurity and uncertainty due to the ongoing trade war will likely keep many potential home buyers and sellers on the sidelines for a while longer.”
He said Oxford Economics anticipates a weak job market and modest layoffs early in the year, with a shirnking population also likely to "curb housing demand and keep supply high." That trend, he added, would likely lead resale prices to slide lower before hitting bottom, "led by declines in higher priced Toronto- and Vancouver-area markets."
Market slump now, cautious optimism later
Despite the gloomy near‑term outlook, Oxford Economics expects conditions to improve later this year. Stillo said the resale housing market “should break out of its slump by mid-year, supported by favourable mortgage rates, improved affordability, less trade policy uncertainty and a resumption of modest job growth assuming a successful renegotiation of the USMCA.”
He also pointed to “a strong fiscal impulse that builds as 2026 progresses” as another support for housing and the broader economy.
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.
Trade risk, rates and a long road to balance
Oxford’s warnings sits within a broader debate over how long it would take for Canada’s housing market to rebalance after years of volatility.
The firm's previous analysis suggested that completions could outpace household formation over the next decade, raising the risk of periods of oversupply and a “prolonged slump in housing prices” as aging owners begin to sell.
Trade tensions and tariff shocks repeatedly stalled budding recoveries, particularly in Ontario and British Columbia, with resale drops concentrated in Toronto, Vancouver and other highly leveraged markets.
At the same time, rapid Bank of Canada rate cuts in earlier phases of the slowdown helped prevent a steeper correction, even as affordability remained stretched in major centres.
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