Canadian home price growth continues to accelerate despite further demand erosion. Canadian Real Estate Association (CREA) data shows home prices jumped in February. The increase was accompanied by sales making the sharpest drop in years—easing inventory pressures even further. That’s not how this traditionally works.
Canadian Real Estate Prices Made Sizable Gains Last Month
The composite benchmark price of existing home sales made through the MLS.
Source: CREA; Better Dwelling.
Canadian existing home prices continued their march upward last month. The price of a benchmark (or typical) home climbed 0.6% (+$4,400) to $713,700 in February. Home prices are 1.0% (-$6,900) lower than last year, but change may be on the horizon.
Canadian Home Price Growth Shows Recent Acceleration
The 3-month (annualized) and 12-month change in price for a typical home according to the CREA composite benchmark.
Source: CREA; Better Dwelling.
Annual growth moved deeper into loss territory, but it was due to a shifting 12-month window. The downward pressure this time last year has begun to roll off, obfuscating the recent acceleration. More recent data shows short-term acceleration, with the 3-month (annualized) rate rising significantly higher than the annual rate. It also happens to be much higher than it was this time last year—when there were no tariff threats, higher population growth, and even more sales.
Since short-term acceleration precedes rising annual growth, it indicates rising upward pressure. A bit perplexing against a backdrop of eroding fundamental demand.
Canadian Home Sales Make Sharpest Drop In Years, Inventory Resilient
Canadian real estate demand continues to fade. CREA specifically notes that seasonally adjusted sales made a monthly drop of 9.8% in February, and it was the sharpest drop since May 2022—back when rate hikes first began. The industry professional group attributed this to “tariff uncertainty,” but it’s worth recalling this uncertainty pushed prices higher.
Unadjusted annual growth in February (-10.4%) shows home sales slowing at a rate similar to pre-trade war announcement. Buyers in the market also paid more, most likely believing that falling rates would push home prices higher in March. There’s a little more to the issue than just tariff-driven uncertainty.
Markets don’t typically see higher prices, weaker sales, and loftier inventory levels. The industry attributed the odd combination to tariff uncertainty, but higher prices indicate this more closely resembles rising exuberance.
Many consumers expected this month’s recent rate cut. Falling rates, while typically a sign of a weak economy, seem to signal speculative growth after the pandemic’s low rate shock. Those expecting cheaper credit to spark a demand surge will be disappointed. The last cut stimulated inflation expectations, increasing mortgage interest costs.
I’d say it’s good time to punch high, offer low. The worse they can say is no.
Canada must protect house prices AT ALL COSTS.
Bank of Canada MUST drop the interest rates to 0% ASAP to protect house prices.
lol no thanks. Prices and homeowners still have a long way to come back down to reality.
Me, myself, believes that this is excellent news.
We must push median price back to $1 million by 2026, 1.5$ million by 2028 and 2$ million by 2030. This will be good for growth in Canada. Rising home prices are an indication of a prosperous society and we cannot be prosperous if housing is cheap.
Govt must allow 100 year mortgage. Maybe 200 year mortgage. That will be good for affordability. A $1 million mortgage with 0% down and a term of 200 years at 3% interest rate would be only 2500$ monthly payment. Very cheap and affordable for youngsters. Time flies by fast and in a short time of 200 years, they will be owning a property of $1 million. Their own small piece of the 2nd largest country in the world.
Sage advice
Sales are down, but prices rise: this is because the only sales still happening are the rich people buying expensive places. Of course, that drives the “average” sale price higher.
I kinda feel sorry for the poor schmucks that put everything in residential real estate, but what we need is prices falling to 50% of the current prices (I can’t say “value” based on what people were paying!)
It isn’t an average, it’s an index with hedonic adjustments. Technically the places can just be worse quality and prices would rise. The real estate industry holds all of the real data and the public can’t see it, so it’s whatever they say.
Canada isn’t a serious country.
I regret the day I arrived here decades ago..
You Yourself can make the Country better I try by donating children’s items such as baby diapers and socks and food to the Foodbank Together we can make Canada a Country You and I will be proud of I also ran for Mayor ten years ago I came in third place and I would like to run again You could too
CREA says the composite benchmark price is down from last month, not up .
https://stats.crea.ca/en-CA/
You’re looking at seasonally adjusted prices, look at “actual” or non-seasonally adjusted which is what they typically use.
Seasonal adjustments don’t make sense for home prices in any way, since the price of a home isn’t influenced the same way. Realtors get hit with an industry fine if they doubt the narrative of the dear leaders publicly though.
This price dip and slower market sales period will not last. Inflation is about to rear its ugly head once again.
Outrageous municipal development fees along with red tape need to be replaced with more drywall tape. New much desired new home development is hindered by high costs. There is no cure for the lack of affordable housing. It has just changed in severity over the last 55 years I have been selling homes. Government and its socialist agenda will not solve the problem by spending taxpayers money. Resale homes will be largest part of real estate activity as usual with new homes a distant second until Canada learns to source building materials within our own borders to avoid tariffs and our US conversion rate of $1.55 on the dollar