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Canada's housing market began the year on a soft note, with home sales falling 5.8% from December, according to the Canadian Real Estate Association (CREA). Compared to January 2025, sales were down 16.2%.
CREA said much of the drop was concentrated in the Greater Golden Horseshoe and Southwestern Ontario, where a major winter storm likely kept buyers and sellers on the sidelines. But economists say the weakness runs deeper than weather alone.
"This was an exceedingly slow start to the year," said TD economist Rishi Sondhi, noting that sales have been trending lower since last summer amid cost-of-living pressures, economic uncertainty and slower population growth.
More homes came onto the market in January, with new listings up 7.3%. That shift pushed the national sales-to-new listings ratio down to 45%, giving buyers somewhat more negotiating power than they had at the end of 2025. Inventory rose to 4.9 months, close to the long-term average.
Prices continue to edge lower
The softer sales backdrop is also showing up in prices.
The National Composite MLS® Home Price Index fell 0.9% from December and was down 4.9% year-over-year. The national average sale price was $652,941, down 2.6% from a year earlier.
CIBC’s Benjamin Tal describes the current market as one where prices are "still too high to buy and not high enough to build," arguing that while affordability has improved from the 2022 peak, the economics of new construction -- particularly condos -- remain strained.
Looking ahead, economists expect 2026 to remain a challenging year for housing overall. Pent-up demand may offer some support, but for now, the market has started the year on ice.
January 2026 snapshot:
- Home sales: -5.8% month-over-month
- New listings: +7.3% month-over-month
- Sales-to-new listings ratio: 45% (long-term avg: 54.8%)
- MLS HPI: -0.9% month-over-month, -4.9% year-over-year
- Average price: $652,941 (-2.6% year-over-year)
- Months of inventory: 4.9 (long-term avg: 5.0)
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