Foch: Canada’s housing market is getting more balanced, but not more active

Canada’s housing market just produced its fourth consecutive monthly sales gain. That sounds like a recovery.

The actual number is less dramatic. According to the Canadian Real Estate Association (CREA), national home sales rose 0.5 per cent from June to July. Activity was still 5.3 per cent below July 2025, while the MLS Home Price Index remained 3.3 per cent lower than a year ago.

Sales are improving. They are just improving very slowly.

The more useful story for Realtors is the return of balance across markets that spent the first half of the year at opposite extremes. Ontario and British Columbia have been moving away from buyers’ market conditions, while parts of the Prairies, Atlantic Canada and Quebec have been cooling from sellers’ markets.

The national average is becoming more representative again. That changes the conversation with clients.

Four monthly gains still leave sales below last year

CREA reported that sales rose 0.5 per cent month over month in July, matching June’s increase and extending the run of gains that began in April. The cumulative direction is positive, but July activity remained 5.3 per cent below the same month last year.

This is the distinction agents need to make when a client hears that sales are “climbing.” A market can improve sequentially while remaining weaker on a year-over-year basis. Both things can be true.

CREA is doing what CREA does: finding the optimistic angle. As is tradition. In fairness, four straight monthly gains are better than four straight declines, and it’s actually very rare to see four months of increases heading into the summer. Sales typically fall in July and August, and volume begins to pick back up in the fall:

Source: CREA Stats XML via HomiesAI.com AI Harness for Realtors

But alas… momentum is not volume. For brokerages and agents, a slow recovery in transactions can still mean fewer deals, longer decision cycles and clients who need more education before they move.

Sellers are pulling listings faster than buyers are returning

New listings fell 1.6 per cent in July, the third consecutive monthly decline. Since sales edged higher at the same time, the national sales-to-new listings ratio tightened to 51.3 per cent from 50.2 per cent in June.

That ratio is moving toward its long-term average of 54.7 per cent. CREA generally considers readings between 45 and 65 per cent consistent with balanced conditions.

Source: CREA Stats XML via HomiesAI.com AI Harness for Realtors

This is just a basic economic equilibrium mechanism at work. A supply response is doing much of the work to get the market balanced. As prices fall, more buyers become willing to buy at that price, and fewer sellers are willing to sell at that price. This is how you reach a balanced market over time, and we’re watching the market try to progress towards equilibrium now.

When sellers do not like the offers available, some cancel, terminate or wait. That removes inventory without proving that buyers suddenly have more purchasing power. In the July data, national supply was nearly flat from a year earlier even as listings declined month over month.

There were 205,388 properties for sale at the end of July, just 0.6 per cent more than a year earlier and 1.5 per cent above the long-term average for that point in the calendar. Months of inventory fell to 4.7, the lowest reading of 2026, compared with a long-term average of five months.

That is a tighter market, but as we’re learning, tighter doesn’t necessarily mean hotter.

Prices finally stopped falling month over month

The National Composite MLS HPI rose 0.1 per cent from June, its first monthly increase since November 2024. The year-over-year decline narrowed to 3.3 per cent, the smallest drop since October 2025:

Source: CREA Stats XML via HomiesAI.com AI Harness for Realtors

The national average sale price was $674,819, up 0.2 per cent from July 2025. Average price and benchmark price measure different things, but both point to stabilization rather than a new price boom. Stabilization eventually gets us to recovery. I think buyers who represent the pent up demand the industry loves to talk about watch prices. If prices are falling, they assume prices will keep falling. If prices fall slower, they assume prices will stop falling soon. If prices are flat, what do they think will happen next? When we start seeing a few months of house prices hovering around 0 per cent on a year-over-year basis, this is when confidence starts to rebuild. Buyers become less concerned that they’re going to lose equity before they take possession of their house. We’re not there yet, but we’re not far from it either. (And yes, I know that adjusted for inflation, they’re still in that position, but let’s set that one aside for a minute. Most buyers think in nominal, not real house price terms.)

Source:CREA 

The bullish case is straightforward: sales have risen for four months, the sales-to-new listings ratio is tightening, inventory is below its long-term norm and benchmark prices finally ticked up. The caution is equally straightforward: July sales were lower than last year, the HPI was still down 3.3 per cent, and the monthly price gain was only 0.1 per cent. Stability is progress, but stability is not acceleration.

The client conversation has to change

At our brokerage operation, we focus on whether a buyer or seller understands the leverage available in their specific segment and local market. The national label is secondary and doesn’t mean a ton to the average buyer, despite it playing a clear role in sentiment.

For buyers, the message is that the broad price decline may be losing momentum. Waiting can still make sense when the property is overpriced or the carrying cost fails the household budget. Assuming that every month will automatically bring a lower benchmark price is becoming harder to defend.

For sellers, balance does not mean 2021 conditions have returned. A 51.3 per cent national sales-to-new listings ratio means roughly one sale for every two new listings entering the market. Pricing ahead of the market can still produce a stale listing, particularly in Ontario and British Columbia, where buyers have had time to become selective.

For agents, this is an expectations market. The best work shows clients the local ratio, the relevant months of inventory, recent comparable sales and what happened to listings that tested an aspirational price.

The bottom line: Normalization is not recovery

July’s data suggests Canada’s housing market is moving away from extremes. Former buyers’ markets are tightening. Former sellers’ markets are cooling. National prices have stopped sliding on a monthly basis, at least for now.

This is healthy. It may also be less exciting than the word “recovery” implies. I think that the market is really looking for less volatility. Since the peak of the market in 2022, all we’ve been hearing about is “uncertainty” and “volatility” and the like. I imagine there probably is a bit of a pent up demand phenomena forming somewhere in the market. In imagining this, I also have to be aware that we probably pulled forward three to four years of demand into the frenzy of 2020-2022 housing demand, so we may just be getting back to the baseline now. But if there’s pent up demand, where are the buyers? I think they’re waiting for certainty. If they stop seeing absolutely wild prints on housing data, I expect they’ll start creeping back into the market. Nobody wants to lever up and take on the (typical real estate trope) biggest financial decision of their lives in an environment where it feels like the economy could change drastically before their first mortgage payment comes out.

Buyers already have enough to worry about with the stock market, bond yields, oil prices, inflation, unemployment, population growth and trade war. Go take a look at any of those charts over the last 10 years and you’ll see what I’m talking about. We don’t need the housing market charts to look the same. The sooner they stop looking like that, the sooner that real estate resumes its historic status as a flight to quality or safe haven investment.

So… we should be welcoming a boring market, if not celebrating it. Not everything needs to be bullish or bearish.

For buyers, the window for patient negotiation remains open, but it may not be widening. For sellers, realistic pricing matters more than waiting for a national headline to rescue the listing. For Realtors, the value is in explaining the difference between a market that is more balanced and one that is genuinely busy.

The first one is here. The second one is still taking its time.

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