Scotiabank analysis highlights the potential negative impact of more tariffs on the latest recovery
Trade tensions with the United States have weighed against the Canadian housing market's performance so far this year – but there could be signs of a potential recovery underway, according to a new analysis from Scotiabank.
Reacting to the news that Canadian home sales climbed for a fourth month in a row in July, the banking giant said it was too early to say whether activity will continue to rise in the months ahead, but suggested positive signals were evident.
“There are now additional signs that a housing sector recovery is possibly underway with sales rising for a fourth consecutive month in July and having recovered since more than half of their losses from last November to March of this year,” analyst Patrick Perrier wrote.
“While potentially too soon to claim this recovery will be sustained, it is nevertheless consistent with what we would expect in a world without the elevated uncertainty from global trade tensions triggered by the new US administration since its election.”
Perrier said buyers may have adjusted to the initial shock caused by the trade uncertainty, which arrived as US president Donald Trump launched plans to impose sweeping tariffs on Canadian imports earlier in the year.
“We [are] maybe at a point now where potential buyers have started to discount this uncertainty in their planning given the feared significant negative impacts on Canada’s economy have yet to become noticeable,” he wrote.
Still, he emphasized that Canada’s housing market isn’t out of the woods yet. “Any increase in trade tensions could further delay this recovery or even reverse it,” he said.
Housing market heats up in July
Across Canada, sales increased 3.8% month-over-month on a seasonally adjusted basis, led by strong gains in Toronto, which accounted for more than 40% of the national rise. Since April, sales have climbed 11.2% and have now recouped more than half of the losses recorded between November 2024 and March 2025.
Compared with last year, home sales were up 6.6% in July. “There are now additional signs that a housing sector recovery is possibly underway,” the report said, while cautioning that external factors could still weigh on momentum.
New listings were little changed, increasing only 0.1% from June. However, they have risen 5.9% from July 2024, continuing an upward trend that began in spring 2023.
With sales rising more quickly than listings, the sales-to-new listings ratio improved to 52% in July, moving further into the range considered balanced. Months of inventory also fell from 4.6 to 4.4, nearly one month below the long-term pre-pandemic average.
At the local level, two-thirds of tracked markets reported sales increases. Ontario markets, which saw widespread declines in June, rebounded sharply. Above 10% monthly increases were recorded in St. Catharines (16.5%), Brantford (13.1%), Toronto (13%), Saint John, N.B. (10.7%), and Hamilton-Burlington (10.6%). The steepest drops came in Charlottetown (-6.2%), St. John’s (-5.3%), and Victoria (-4.8%).
Despite stronger sales, national prices were stable. The MLS Home Price Index was flat between June and July, as higher values for two-storey homes were offset by declines in apartments and townhouses. On an annual basis, prices were down 3.4%, with apartments posting the largest year-over-year drop.
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