As summer unfolds, Canada’s housing market finally appears to be settling into a renewed rhythm. July 2025 brought the fourth straight month of rising home sales, heralding a possible shift away from the uncertainty that clouded spring. Drawing on insights from the Canadian Real Estate Association’s (CREA) latest report, this in-depth blog explores the key data, what’s behind the trends, regional variations, and how the road ahead might look.
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The Numbers in Focus: Steady Gains and Stabilizing Prices
Home Sales Continue Climbing
Home sales recorded through Canadian MLS® Systems rose 3.8% month-over-month in July 2025. That marks a cumulative gain of 11.2% since March—an indication that buyers are re-entering the market with growing confidence.
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Notably, the Greater Toronto Area (GTA) played a starring role. Despite still being below historical norms, the region’s transactions have surged 35.5% since March, emphasizing a concentrated rebound in one of the nation’s most significant urban markets.
Economist Shaun Cathcart of CREA described this as the “long-anticipated post-inflation crisis pickup in housing” finally arriving, reflecting pent-up demand, improved buyer sentiment, and seasonal dynamics playing catch-up.
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Prices—Holding Ground, Softening Moderately
While market activity ramps up, prices appear more steady than soaring. The national average sale price showed a modest 0.6% year-over-year increase compared to July 2024.
Meanwhile, the MLS® Home Price Index (HPI)—which reflects typical home value trends—was flat month-over-month from June to July, though it remained down 3.4% year-over-year. Importantly, that decline is less steep than in June, signaling a moderation in price drops.
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These figures suggest that while affordability remains tight for many, the pace of decline is slowing—offering cautious hope for balanced conditions ahead.
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Inventory and Market Balance: A Subtle Shift Toward Sellers’ Ground
July’s inventory landscape showed only a slight increase: new listings rose just 0.1% from June, essentially unchanged.
But when paired with rising sales, this pushed the national sales-to-new listings ratio up to 52%, from 50.1% in June and 47.4% in May. This metric remains within the balanced-market range of 45% to 65%, but is edging closer to seller-favorable territory.
Total active listings stood at 202,500 properties, a 10.1% increase year-over-year and in line with long-term seasonal trends. Meanwhile, months of inventory dropped to 4.4 months, below the five-month long-term average—another indicator of tightening supply and market momentum toward sellers.
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Reading Between the Lines: What’s Driving the Market Turn?
Breaking Through Spring’s Hesitation
The spring market, traditionally a period of peak activity, was notably subdued in 2025, weighed down by economic and political uncertainty. Trade tensions, impending elections, and stubborn inflation created an atmosphere of urgency to “wait and see” among buyers.
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Now, however, the narrative is shifting. With employment data stabilizing and sentiment improving, buyers appear to be moving off the sidelines—suggesting momentum may carry well into fall.
Regional Realities: While GTA Leads, Other Regions Vary
The GTA’s powerful rebound highlights how regional dynamics are diverging. Much of the rest of the country still lags behind—some markets showing moderate improvement, others holding steady.
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For instance, smaller centers and more affordable regions are seeing steadier gains, while overheated or affordability-stricken markets like the GTA and BC continue to both lead recoveries and pose challenges in price stability.
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Forecasting the Road Ahead: Mixed Expectations, Cautious Optimism
CREA has adjusted its housing forecast: 2025 is now projected to see a 1.7% annual decline in national average home prices, landing at about $677,368, which is roughly $10,000 lower than earlier projections.
However, for 2026, they expect a 3% rebound in home prices, reaching approximately $697,929, alongside a 6.3% increase in sales, although still below 500,000 units for the fourth consecutive year.
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Economists describe this scenario as one of a “very balanced and stable” market—where elevated inventory but softening prices might nudge latent buyers forward.
Still, the forecast remains contingent on global and domestic economic developments—including monetary policy shifts and geopolitical stability.
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Market Dynamics at a Glance: Patterns Emerging in Mid-2025
| Metric | July 2025 | Insight |
|---|---|---|
| Home sales (m/m) | +3.8% | Fourth consecutive monthly gain—confidence returning |
| Cumulative sales since March | +11.2% | Strong spring-to-summer rebound in motion |
| GTA sales rebound since March | +35.5% | Regional leadership from Canada’s largest market |
| Average sale price (y/y) | +0.6% | Modest gains; nearing price stabilization |
| HPI (m/m) | Unchanged | Benchmark values stabilizing |
| HPI (y/y) | –3.4% | Losses moderating from earlier months |
| New listings (m/m) | +0.1% | Supply remains essentially steady |
| Sales-to-new listings ratio | 52% (up from 50.1%) | Market balance tilting toward sellers |
| Active listings | 202,500 (+10.1% y/y) | Inventory aligning with seasonal norms |
| Months of inventory | 4.4 | Tightening supply, supporting price stability |
The Story Behind the Figures: Implications for Stakeholders
Sellers: A Window of Opportunity
For sellers, this market moment is encouraging. Rising demand, balanced—or slightly seller-skewed—conditions, and stable prices provide a supportive backdrop for listing properties. Timing could be advantageous, particularly in regions like the GTA where activity has rebounded the most.
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Buyers: Challenges and Cautious Optimism
Affordability continues to be a significant barrier. Yet, easing price declines and greater inventory visibility could offer more decision-making time. Buyer interest may strengthen, especially if interest rates remain stable or ease further.
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REALTORS®: Strategic Value at the Forefront
With market conditions evolving rapidly, REALTORS® play a vital role in guiding clients. Understanding local nuances, timing, and buyer sentiment is now more critical than ever. Engaging early with clients—particularly heading into fall—is essential.
Policymakers and Analysts: Watching for the Rebound
Canada’s housing sector remains sensitive to broader economic shifts. Policymakers need to carefully monitor sales trends, regional developments, and affordability pressures to guide any necessary interventions or rate decisions. The interplay between urban affordability and rural/popular regions’ demand will play out as a key narrative.
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Looking Ahead: Fall Factors and Long-Term Watchpoints
Fall Market Kickoff: New Listings vs. Demand Surge
Historically, early September triggers a surge in new listings as homeowners enter the market. This coming fall, the supply influx will collide with rising buyer activity. Market watchers will be keen to see whether increased supply dampens momentum, or whether demand continues to outpace new listings.
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Watch for Monetary Policy Shifts
The Bank of Canada has held rates at 2.75%, yet any adjustments—downward or upward—could meaningfully impact mortgage affordability and market sentiment. A rate drop would likely fuel further activity; conversely, increases could recoil buyer enthusiasm.
How Long Will Recovery Last?
CREA’s forecast of rising prices and sales through 2026 is promising, but economic uncertainty, evolving policy, and regional disparities could reshape outcomes. Investors, industry watchers, and consumers should prepare for a path that may deviate from forecasts if macro conditions shift.
Final Thoughts: July 2025—A Turning Point or a Pause Along the Way?
July 2025 stands out as a significant marker for Canada’s housing market. After months of tentative recovery, the data indicate that resilience is strengthening: sales are rising, prices stabilizing, and balance returning. While challenges remain—particularly around affordability and regional divergence—the momentum is real.
The next few months, especially the autumn season, will prove telling. Will new listings reinvigorate supply and moderate momentum, or will buyer confidence continue to drive the market forward? Will mortgage rates shift the affordability equation?
For now, July’s data offer a reassurance that the housing market is not only stable but adaptable—a sector ready to pivot back into activity after the long uncertainty of the past year.