Canada’s housing market is flashing a counterintuitive mix of signals. Resales are picking up momentum while prices remain subdued and builders tap the brakes.
The combination points to a market that is thawing on volumes rather than sparking another price spike, a pattern with clear implications for buyers, sellers, and housing-sensitive stocks.
National home sales edged up 1.1% in August from July, marking a fifth consecutive monthly gain and the strongest August since 2021.
Activity has risen 12.5% since March, according to the Canadian Real Estate Association’s monthly report. On an unadjusted basis, transactions were up 1.9% from a year earlier.
The association also noted that August’s momentum was no longer concentrated in Toronto, with increased demand in Montreal, Greater Vancouver, and Ottawa offsetting a slight dip in the Greater Toronto Area.
New listings rose 2.6% in August, easing the sales-to-new-listings ratio to 51.2%, a level consistent with balanced conditions.
There were 195,453 properties listed for sale at month end, up 8.8% from a year earlier and roughly in line with the long-term average for this time of year.
Months of inventory fell to 4.4, the lowest since January but still near historic norms. That mix helps explain why rising sales are not yet pushing prices materially higher.
CREA’s benchmark MLS Home Price Index slipped 0.1% in August from July and was 3.4% lower than a year earlier, while the national average sale price rose 1.8% year over year to $664,078. The picture is broadly consistent with other gauges that show price stabilization rather than acceleration.
On the construction side, the Canada Mortgage and Housing Corporation reported a sharp monthly pullback, with the seasonally adjusted annual rate of housing starts falling 16% in August to 245,791 units.
CMHC’s six-month trend measure still ticked up 1.6% to 267,259 units, and actual starts in larger centers were 10% higher than a year earlier, but the agency flagged the drop in the monthly pace as meaningful.
Kevin Hughes, CMHC’s deputy chief economist, said in a news release, The slowdown in the SAAR that we saw in August is notable as it is well below the six-month trend line. He added that if sustained, the adjustment would fit with forecasts for a slower construction pace.
The Bank of Canada cut its policy rate by a quarter point to 2.5% on Sept. 17, citing a softer labor market and easing inflation pressures.
Lower borrowing costs should support demand into the fall, especially if fresh listings continue to arrive and keep conditions balanced that said, any rate relief will flow through unevenly, and affordability constraints remain acute in the priciest markets.
Transaction volumes are recovering without a broad price breakout, new-home activity is cooling from high levels, and monetary policy has shifted to gentle easing that cocktail argues for focusing on operators with exposure to resale churn, mortgage originations, title services, and renovation demand rather than betting on a near-term upswing in developers’ pre-sales.
Regionally, watch for leadership outside the GTA if the recent rotation holds and keep an eye on inventory. If new listings continue to edge higher while rates drift lower, the market could sustain more activity without rekindling the price inflation that defined the last cycle.
Buyers are finding more choice at more stable prices, and financing costs are finally easing. Sellers are seeing more foot traffic, but success still hinges on realistic pricing and condition.
