At the start of the year, RBC anticipated that interest rate cuts would spur activity and push prices slightly higher.
But, with an unexpected trade war suppressing sales and prices in Canada’s biggest regions, market conditions have been weaker than expected.
In a housing report released Tuesday, RBC assistant chief economist Robert Hogue said the bank now projects home resales will decline 3.5 per cent in Canada to 467,100 units this year, with the first half of 2025 seeing a 4.1 per cent pullback, largely concentrated in Ontario and B.C.
‘Gradual recovery’ on the horizon
“Encouragingly, recent signs of an ongoing recovery have emerged,” said Hogue. “Prospective buyers are re-entering the market as economic fears ease and lower interest rates gain traction. We expect this gradual recovery to continue in the second half of 2025, setting the stage for stronger demand in 2026.”
Hogue said RBC is projecting a 7.9 per cent rebound in home resales next year to 504,100 units, which is still under the pre-pandemic five-year average of 511,000 units.
“Several constraints will temper the recovery. A fragile labour market, reduced immigration targets, and affordability challenges will limit the pace of growth,” Hogue noted.
Prices expected to dip
The national composite RPS Home Price Index is expected to rise by 0.7 per cent in 2025, but this reflects gains made earlier in the year.
“We anticipate prices will decline in the latter half of 2025 and into 2026 with Ontario and B.C. experiencing the steepest drops due to high inventory levels and strong competition among sellers,” said Hogue.
Nationally, prices are expected to decline by 0.7 per cent in 2026, reversing this year’s modest increase.
“For pricing, supply-demand conditions have shifted in buyers’ favour, particularly in Ontario and B.C., where affordability issues are acute.”
Pandemic frenzy made even
“The pandemic’s impact on the housing market appears to have run its course. Exceptional circumstances—including rock-bottom interest rates, government income support, and shifting housing needs—accelerated transactions that would have occurred later,” said Hogue. “The subsequent market slump triggered by rate hikes in 2022 largely corrected this unsustainable surge.”
RBC’s data suggests a growing number of Canadians are ready to re-enter the market under the right conditions, such as improved affordability, stable interest rates, and better job prospects, said Hogue.
Improved affordability has limited impact
Declining ownership costs driven by lower rates and moderating prices in some regions have made homeownership the most affordable it’s been in three years.
“This trend is expected to continue, encouraging more buyers to act,” said Hogue.
However, significant affordability challenges persist, particularly in high-priced markets like Ontario and B.C.
“Despite some relief, the share of household income required to cover ownership costs will remain well above pre-pandemic levels, limiting the pace of recovery.”
Sellers competing for offers in Ontario and B.C.
Inventory is at decade highs in Ontario and B.C., as an influx of listings is met with weaker demand.
However, inventory is tight in the Prairies, Quebec, and Atlantic Canada, where listings are still below pre-pandemic levels.
“We expect supply and demand to gradually rebalance as sales pick up,” said Hogue. “However, it will take time for the market in Ontario and B.C. to stabilize. Until then, strong competition among sellers will likely keep prices under pressure with declines continuing into early 2026 before steadying.”
So it’s August 14th and tomorrow CREA will claim
“Nationally, home sales activity was up by 6.6% from year-ago levels in July 2025”
yes some of us get these reports early be sure to ask your broker owner for theirs!
Of course RBC’s Houggie has never actually seen the data he claims to be using to provide RBC thought leadership with his housing market guesses. That is why he and all other Bank Economists like Benny TalTales have been laughed at monday morning house tour meetings for decades.
In order for you to swallow this Houggie if you have the data you would need to believe 484,042 resale homes were traded across Canada’s mls systems in 2024. Of course anyone with the data knows the Resale homes traded on Canada’s mls systems were not even close to 484K in 2024.
This Houggie also requires you swallowing BC and ON reaching their natural minimum trading floor didn’t happen in May or that AB sales will totally collapse as will Quebec in an amount to exceed increase BC and ON will record.
Houggie has no idea that “sales reported to the mls system in June” never measures June Sales. Houggie believes you can seasonally adjust mls trading data when anyone working alongside CREA when it introduced SA stats knows it was done to give agents more false narratives to use in their attempts to reverse negative trends before they become set in stone or get more negative.
Do you really think Houggie understands why TRREB has now made all it’s pre-2024 published Market Watch reports no longer comparable to any from 2025 going forward?
Do you really think Houggie understands why GVREB rebranded to GVR or how Cornerstone now impacts all his forecasts even though he has never been told?
Do you really think Houggie has any idea what happens to Buyer looking at FVREB listings when they find they can now afford a GVR listed home?
Do your really think Houggie knows the 1000s of adjustments you need to make to Canada’s national mls dataset (I know shhh…you can’t call it that) just in order to read what that data is really telling you?
Do you really think Houggie knows why Remax settled or he knows what Walter and Frank always knew?
What you do know is that Houggie and TallTales both believe all the stories realtors made up decades ago when it was illegal for any Buyer in the country to be represented by a realtor.
Of course those stories were warned about in the Danger Report of 2015 for anyone who had the mls expertise to read what was actually being said.
So in the same way Houggie and TallTales missed the market turn in 2021 they are missing the one that happened two months ago.
Don’t get excited though because we all know what happens to house prices after the floor has been reached.
MLS data was never mentioned in this article. Statistics can only be based on transactions closed and title transferred. Not on potential sales that may never close. If you are looking at micro markets where sales activity may be different, that is not national averages. The facts are, the real estate market in Canada will continue to struggle the remainder of 2025. The majority of buyers still cannot afford to purchase a property when the averages in Canadas major cities are still around One Million Dollars. And that is the Country of Canada, only a few major markets. All the smaller markets in Canada will not make a difference to the real estate market. Maybe that is why the Federal Government is so slow to take action against a housing crisis. Because there is not a housing crisis. There are thousands of affordable home that consumers can buy. Unfortunately they are all located in areas and regions they do not want to live in. Canada is a vast Country based on area. But a very small Country based on major cities.