Uncertainty on Tariffs Disrupts Canada’s Housing Market

The housing market in Canada has experienced a significant downturn due to ongoing trade disputes with the United States. According to a recent survey by Royal LePage, nearly half of Canadians looking to buy a home have decided to postpone their plans due to concerns about rising costs, economic and political uncertainty, and potential declines in home prices.

The real estate market, which had been showing signs of recovery, has taken a hit as a result of tariffs and trade tensions. Despite lower interest rates and falling house prices, home sales have plummeted, with experts predicting that a meaningful rebound is unlikely as long as uncertainty lingers. Nicole Lechter, a real estate analyst at RSM Canada, describes the current market situation as chaotic, stating that interest rate cuts have not led to an increase in home purchases. She notes that prospective buyers are apprehensive about tariff fears, job insecurity, and mounting debt.

Sales in the housing market had been improving towards the end of 2024 after years of below-average performance. However, the imposition of tariffs resulted in a sharp decline in home resales across the country, with sales dropping by nearly 10% from January to February – the largest decline in close to three years. Robert Hogue, assistant chief economist at RBC, highlights the impact of tariffs on the market, noting that despite interest rate cuts and increased market activity, the trade wars have disrupted the recovery path.

The uncertainties surrounding tariffs have led to a 12.0% decrease in resale activity nationwide since January, with a further 4.8% decline from February to March. The Canadian Real Estate Association reports a 20% decrease in national home sales compared to levels recorded in November of the previous year. Additionally, the supply of existing homes for sale has increased, with active listings reaching a five-year high. Lechter emphasizes that while there are ample housing options available, buyers’ confidence has taken a hit, resulting in a significant shift in the market in 2025.

Looking ahead, the Canadian housing market must navigate the dual challenges of tariff uncertainty and potential economic repercussions. Senior economist Shaun Cathcart of CREA warns that the rebound initially expected for the market is now uncertain, with the landscape shifting to one of stagnation. Hogue suggests that despite interest rate cuts and lower mortgage rates, buyers are primarily concerned about job security and economic stability. He believes that unlocking pent-up demand requires a substantial improvement in affordability.