U.S. President Donald Trump’s trade war will continue to hit Canada’s housing market, with a recovery in prices unlikely until 2026, a new report from the Canada Mortgage and Housing Corporation said on Thursday.
“Canada’s housing market will continue to cool in 2025 due to trade tensions, economic uncertainty, slower population growth and increasing unemployment. Home prices are expected to fall around 2%,” the CMHC’s summer housing market outlook said.
The largest drops in home prices will be in Ontario and British Columbia, which are both home to some of Canada’s most expensive housing markets.
“Trade tensions and slower population growth are contributing to a likely modest recession in 2025, dampening business and consumer confidence and slowing housing activity,” the report said.
Homebuyers and developers alike will continue to take the “wait-and-see” approach to the housing market amid the impact of the tariffs and economic uncertainty, it added.
“Affordability remains a major issue and new construction is slowing. Rental markets are easing slightly as more supply comes online and demand softens,” the report said.
What will happen next year?
The housing market is likely to remain cool for the rest of 2025, the report predicted. A gradual recovery is only expected to begin by 2026.
The CMHC said the negative impact from trade tariffs will “peak in the second half of 2025” but will begin to abate by 2026, along with the Canadian GDP. During this time, Canada’s housing market will remain in a “period of adjustment.”
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“We expect conditions to stabilize more in 2026 as trade tensions ease, mortgage rates moderate and demand slowly recovers. As the economic environment improves, the housing market should gradually return to a more balanced trajectory,” the report said.
Canada started building slightly more homes in June than it did in May, the CMHC said in a report last week.
Compared with May, the annual rate of housing starts was largely flat, with a 0.4 per cent increase, but it rose 14 per cent compared with this time last year.
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