Canadian homebuyers hesitant amid rate holds, economic uncertainty, and slow market rebound
Home prices in Canada crept up slightly in the second quarter, but not enough to match earlier projections for the year, according to Royal LePage’s latest House Price Survey and Market Forecast.
The real estate company has adjusted its 2025 home price forecast downward, reflecting weaker-than-expected activity in high-priced regions like Toronto and Vancouver. The national aggregate home price rose just 0.3% year-over-year to $826,400 in the second quarter, while dipping 0.4% from the previous quarter.
Royal LePage now expects a 3.5% increase in the national home price by the end of Q4, slightly below its original estimate.
Sluggish spring sales
Canada’s spring market failed to deliver its usual surge in activity, with homebuyers opting to wait amid political and economic uncertainty.
“Homebuyers approached the start of the 2025 spring market with hesitation, dampening what is typically the busiest season on the real estate calendar,” Royal LePage president and CEO Phil Soper said in the report.
That hesitation was particularly evident in Ontario and British Columbia, where inventory levels are rising while demand continues to lag. The Bank of Canada’s decision to hold its policy rate steady at 2.75% throughout April and June did little to boost confidence, as “trade disputes, a federal election, and international conflicts” kept many prospective buyers on the sidelines, Soper noted.
Still, Soper sees signs of a turnaround.
“Yet, market fundamentals remain sound; interest is strong while activity is subdued, reflecting the uncertainty weighing on consumer sentiment,” he added. “Encouragingly, June’s robust employment report may help rebuild confidence and bring more buyers off the sidelines in the months ahead.”
Wages have been outpacing home price gains in recent years, gradually improving affordability. Since April 2022, average weekly earnings in Canada rose 11.8%, while aggregate home prices have dropped 3.6% from their early 2022 peak.
“Housing affordability has already begun to improve,” said Soper. “Wage growth is outpacing home price gains in many markets, and borrowing costs have eased over the past year. But these gains remain fragile.”
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Nationally, detached homes fared better than condos. The median price for single-family homes rose 1.1% to $870,200 year-over-year, while condominium prices fell 0.8% to $592,000. Quarter-over-quarter, detached home prices ticked up just 0.2%, with condo prices dropping 1.0%.
Mild rebound
Despite subdued momentum in the first half of 2025, the company remains cautiously optimistic about a mild rebound in the fall.
“With borrowing costs stable and inventory levels continuing to build, the foundation is in place for a stronger market this fall,” said Soper.
However, Royal LePage warned that any resurgence in demand must be matched by adequate housing supply to avoid a return to steep price escalation.
“Sustainable affordability hinges on our ability to significantly boost Canada’s housing supply over the long term,” said Soper.
Soper also noted the impact of federal policy on long-term housing outcomes, saying supply-side strategies such as faster permitting and infrastructure investment would be critical.
“Policy support that accelerates permitting, expands infrastructure investment, and incentivizes purpose-built rental development will be essential to meeting long-term housing demand,” he said. “Affordability gains will only be possible if supply keeps pace with household formation. All eyes are now on the government’s fall budget for a clear roadmap to support housing development, investment and economic stability.”
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