Canadian home sales experienced a notable 5.2% increase in September compared to the previous year, marking the most active September since 2021. This uptick, coupled with an improved forecast from the Canadian Real Estate Association (CREA), suggests a stronger finish to the year than initially anticipated, driven by renewed market sentiment and a recent interest rate cut.
Last month, 39,700 homes were sold across Canada, a significant increase from the 37,721 sales recorded in September of the previous year. This surge in activity is attributed, in part, to the September interest rate cut, which has reportedly improved market sentiment. Sales representatives are observing increased activity and a return of bidding wars in certain market segments, with some buyers seeing current conditions as an opportunity to enter the market.
CREA has revised its outlook, now expecting a softer decline in home sales for the current year and upgrading its forecast for 2025. The association now anticipates a total of 473,093 residential properties to be sold in 2025, representing a 1.1% decrease from 2024, a more optimistic projection than its earlier forecast of a 3% drop. Despite this overall improvement, CREA still expects decreases in activity in British Columbia, Alberta, and Ontario, which will be offset by gains in other regions.
The national average home price saw a modest increase of 0.7% in September compared to a year ago, reaching $676,154. However, CREA's own home price index, which tracks typical home sales, indicated a slight dip of 0.1% between August and September. Looking ahead, CREA forecasts the national average home price to fall 1.4% annually to $676,705 in 2025, with declines expected primarily in B.C. and Ontario.
While sales have returned to pre-COVID norms nationally, affordability remains a challenge for potential homebuyers. Economists suggest that further price declines or lower mortgage rates are needed for the market to clear more effectively. The prospect of mortgage rates dipping into the low three-percent range could potentially invigorate the market further.
Concerns regarding the ongoing trade situation with the United States continue to linger, contributing to some buyer hesitation. Despite the recent sales increase, new listings saw a slight dip in September from August, though the total number of properties listed for sale at the end of the month was up 7.5% year-over-year.
CREA is optimistic about the final quarter of the year and into 2026, anticipating further upward momentum in home sales. The association forecasts a rebound of 7.7% in national home sales for 2026, reaching 509,479 units, with the national average home price expected to increase by 3.2% from 2025 to $698,622.