As we pass the mid-point of 2025, Canada’s housing market is complicated but fascinating. Buyers and sellers are navigating a mix of forces that are shaping decisions in ways we haven’t seen in years. The Bank of Canada decided to hold its benchmark interest rate steady at 2.75% earlier this month. That choice reflects where we are as a country, in a holding pattern between caution and curiosity.
The central bank’s move came after a year of steady rate cuts. Since then, 2.25 percentage points have been shaved off the overnight rate to support economic growth. Those cuts are starting to have an effect. Mortgage applications are slowly ticking upward, and some potential buyers who sat on the sidelines during the rate hikes of 2022 and 2023 are returning to the table.
But that renewed activity is still tentative. The broader economic backdrop is mixed, and that’s keeping people cautious. Unemployment crept to 7% in May, the highest it’s been in nearly a decade. Even though the economy added 8,800 jobs that month, many were part-time. Job security is still a major concern, especially for younger households and first-time buyers. That sense of instability makes it harder to commit to a mortgage, even if the numbers look better on paper.
While inflation slowed to 1.7% in April, one of the Bank of Canada’s core measures, CPI-trim, rose to 3.15%, highlighting the uneven progress in controlling inflation. That puts pressure on the Bank of Canada to keep a steady hand. Policymakers are weighing the risk of cutting rates too quickly against the need to maintain economic momentum. It’s a balancing act, and for now, they’ve chosen to pause and assess.
Even so, there are signs of resilience in the market. In cities like Toronto and Vancouver, the aggressive bidding wars of past years have largely disappeared, and buyers are finding more breathing room. Conditional offers are making a comeback, and sellers are adjusting their expectations. First-time buyers, in particular, see opportunities that didn’t exist even a year ago.
The numbers released last week by the Toronto Regional Real Estate Board were cause for concern for the city’s real estate market. They showed 30,000 active listings in May, a 41.5% increase from a year ago. Sales were down 13.3%. Buyers are clearly waiting for listings to drop in price in the country’s largest city.
But the Canadian Real Estate Association forecasts a 4.7% rise in the national average home price for 2025, bringing it to about $722,000. That’s not a dramatic jump, but it suggests that the market is standing. Prices are climbing reasonably, and in many regions, the supply of listings remains tight enough to support continued growth.
There’s no denying the challenges ahead, from global trade tensions to domestic affordability concerns. But there’s also a sense that things are moving again. People are re-engaging with the market, making plans, asking questions, and considering real estate as a sector in which to invest.
The next few months will matter. If rates stay stable or drop further, and job numbers improve, we could see more confident activity heading into the fall. For now, the market feels like it’s waking up with a steady, deliberate stretch into something new.