Canada Mortgage and Housing Corp. is forecasting a rebound in home sales and prices this year as homebuyers take advantage of improved borrowing conditions, but says its outlook is clouded by the threat of widespread tariffs from the U.S.
The national housing agency says a trade war between Canada and U.S., along with factors such as reduced immigration targets, would likely slow the economy and limit housing activity, even as some households see improved buying power in the short-term.
Despite those challenges, the agency’s 2025 market outlook report predicts the combination of lower borrowing costs and Ottawa’s changes to mortgage rules will help unleash pent-up demand from those who have felt priced out of the market.
While sales in the most unaffordable markets such as Ontario and B.C. will likely stay below 10-year averages, homes should change hands at “historically high levels” in Alberta and Quebec, with prices growing faster than national averages.
But Canada is set for a slowdown in housing starts over the next three years due to fewer condominiums being built, as investor interest lags and demand from young families wanes.
Meanwhile, CMHC says an uptick in the number of first-time homebuyers and reduced immigration flows will lead to lower rental demand, higher vacancies and slower rent increases for the next three years.