Can Prairie and Atlantic markets weather the economic storm?
The ongoing trade war between the United States and its global partners is undermining what had appeared to be a budding recovery in Canada’s housing market, according to a new report by RBC Economics.
The latest Monthly Housing Market Update revealed a drop in home resale activity and softening prices nationwide. Economic uncertainty fuelled by tariffs has spooked buyers and stalled momentum, particularly in the country’s most unaffordable regions.
“Concerns about the potential economic hit from US tariffs have clearly unsettled buyers in the past two months, many of whom pausing their search for a home,” the report noted.
Since January, home resales across Canada have dropped by 12%, including a 4.8% decline between February and March. Meanwhile, the number of active listings reached a five-year high, as new listings climbed 3% in the same period. With supply rising and demand cooling, buyers have been negotiating lower prices.
The national MLS Home Price Index fell 1% from February to March and is now down 2.1% compared to the same period last year.
Ontario and BC markets hit hardest
The downturn is particularly stark in Ontario and British Columbia, where affordability challenges were already straining market confidence. Southern Ontario, facing additional pressure from weakening labour markets and exposure to trade-related economic shocks, is seeing widespread pullbacks.
Ontario resales fell by 21% over two months, and BC saw a 17% decline. Some of the steepest drops include the Toronto area (-27%), London (-25%), Fraser Valley (-23%), and Vancouver (-19%).
Nearly all major markets in these provinces also recorded price declines in March, ranging from 0.7% in Vancouver to 2.5% in London.
“Odds are prices in Ontario and BC will continue to slump in the near term,” RBC warned, suggesting further drops are likely unless supply-demand conditions shift.
Prairie and Atlantic regions show resilience
In contrast, markets in the Prairies and Atlantic Canada have remained comparatively resilient. Home resales in Alberta, Saskatchewan, Manitoba, and several eastern provinces remain at or above pre-pandemic levels. Tight supply has supported price growth in cities such as Edmonton, Winnipeg, Quebec City, and St. John’s.
Still, RBC expects even these stronger regions to feel the pressure as the economic toll of the trade war spreads. “We expect price gains to broadly moderate as the trade war weighs on local economies and undermines confidence,” the report noted.
RBC concluded that the trajectory of the housing market hinges largely on US trade policy. Any escalation could deepen the slump, while signs of resolution could help restore buyer confidence and unlock demand.
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