The Canadian housing market is expected to regain momentum this spring after closing 2025 with modest price declines and subdued activity, according to a new forecast from Royal LePage.
The company says buyer engagement is likely to improve in coming months as borrowing costs ease and affordability improves, though ongoing economic uncertainty and cautious consumer sentiment are expected to prevent a sharp rebound.
Prices slip to end 2025
According to the Royal LePage House Price Survey and Market Forecast released Thursday, the national aggregate price of a home fell 1.5 per cent year over year in the fourth quarter of 2025 to $807,200. On a quarter-over-quarter basis, prices declined 1.1 per cent.
The firm said the late-year slowdown reflected softer market conditions and persistent buyer caution during what is typically one of the busiest periods for home sales.
Phil Soper
“Despite subdued activity levels, home prices largely held their ground in the final quarter of 2025,” said Phil Soper, president and CEO of Royal LePage. “Economic uncertainty – driven by trade disputes and broader geopolitical tensions – has weighed on consumer confidence and muted what is typically a more active fall market. Instead of a fall seasonal surge, we saw a quieter close to the year.
“That said, buyers heading into the spring market have a meaningful advantage over last year: lower borrowing costs, stable or lower property prices, and choice. In an era where home inventory is chronically constrained, inventory levels are Goldilocks healthy. Together, these conditions are creating a genuine window of opportunity, particularly for first-time buyers in Canada’s most expensive markets.”
Regional and housing-type differences
The Royal LePage National House Price Composite is based on proprietary data from 64 major real estate markets across Canada, with pricing information supplied by RPS Real Property Solutions and including both resale and new-build homes.
In the fourth quarter, the national median price of a single-family detached home declined 0.8 per cent year over year to $849,100, while the median price of a condominium fell 2.9 per cent to $575,300. On a quarterly basis, detached home prices dropped 1.3 per cent and condominium prices slipped 0.9 per cent.
Among major metropolitan markets, Toronto and Vancouver recorded the steepest annual declines, with aggregate home prices down 5.7 per cent and 4.1 per cent, respectively. By contrast, the Greater Montreal Area saw prices rise 4.5 per cent year over year. Quebec City posted the strongest performance among major regions, with aggregate prices increasing 13.2 per cent for the seventh consecutive quarter.
“At long last, home values across Canada are beginning to compress,” said Soper. “For years, price growth in Toronto and Vancouver far outpaced the rest of the country, but our two most expensive metro markets have experienced gradual price declines for four years now, while other major cities saw steady, modest appreciation and are closing the gap.
“This convergence has meaningful implications. As affordability improves in Southern Ontario and British Columbia’s Lower Mainland, households are less likely to feel pressured to relocate purely on housing costs, potentially tempering the interprovincial migration patterns that intensified during the pandemic.”
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Condo segment under pressure
Royal LePage said price weakness in Toronto and Vancouver has been most pronounced in the condominium segment, where elevated inventory levels and softer demand have continued to weigh on values.
“Condominium markets in major urban centres remain under pressure, as weaker demand continues to collide with increased supply,” said Soper. “During the brief period of elevated interest rates following the pandemic, many small-scale investor-landlords found the cash flow math no longer worked. Higher carrying costs forced some to exit the market, adding to resale supply.
“Under normal conditions, investors would be expected to return as borrowing costs eased through 2024 and 2025. This time, however, the timing worked against them. Reductions in immigration numbers, as well as quotas for temporary foreign workers and international students, have sharply curtailed rental demand, leaving fewer tenant customers just as rates began to fall.”
Spring market outlook
The company said the spring 2026 housing market is expected to be more active than the winter period, though not as strong as past spring rebounds. Continued consumer caution and limited urgency among buyers are expected to keep both sales activity and price growth in check.
“The conditions are in place for a more active spring market in 2026. Interest rates are no longer a barrier to home ownership, inventory levels are healthy, and economic indicators continue to point to moderate growth in both GDP and employment,” said Soper.
“What continues to be a drag on the housing market is consumer confidence. Greater clarity on trade relations with the United States would certainly help, but there’s also a more subtle shift underway. After a full year of economic and political turbulence, more and more households have given up waiting for perfect certainty and are refocusing on what is happening at home, and what matters most: securing the right housing for their families. As that adjustment takes hold, we expect it to gradually translate into increased market participation.”
Interest rates and outlook
Royal LePage noted that the Bank of Canada held its overnight lending rate at 2.25 per cent in its final announcement of 2025 on Dec. 10, after cutting rates four times during the year for a total reduction of 100 basis points. The company said economists generally expect the easing cycle to be on hold for the foreseeable future.
“Borrowing rates have moved back toward a more neutral setting – neither stimulating nor acting as a drag on economic activity. That’s a return to more normal conditions,” said Soper. “Rates can still move modestly in either direction depending on how the economy evolves, but the most likely scenario is a period of stability.
“For homebuyers and those approaching a mortgage renewal, stability matters. It provides greater certainty around financing costs and allows households to make housing decisions based on need and affordability, rather than trying to time interest rate moves.”
2026 forecast
In its December 2026 Market Survey Forecast, Royal LePage projected the national aggregate home price will rise one per cent in the fourth quarter of 2026 compared with the same period a year earlier. The company expects the median price of a single-family detached home to increase two per cent, while condominium prices are forecast to decline 2.5 per cent.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
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