Threat of trade war weighs on Canadian home sales
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Home sales in Canada fell 3.3% in January from a month earlier as the threat of a trade war with the U.S. kept buyers sidelined, the country’s main realtor association said this week.
Meanwhile, new listings surged 11%, the most in at least 30 years. James Mabey, chair of the Canadian Real Estate Association, said, “While we continue to anticipate a more active spring for the housing sector, the threat of a trade war with our largest trading partner is a major dark cloud on the horizon.”
Earlier this month, U.S. President Donald Trump imposed 25% tariffs on all imports from Canada, excluding energy, which is subject to 10% tariffs, set to take effect on March 4. The Bank of Canada estimates that wide-ranging 25% tariffs and full retaliation would lower Canadian GDP by 2.5 percentage points in the first year, create large job losses and increase inflation.
Mabey said the “softer pricing environment” along with lower interest rates are presenting an opportunity for some buyers. The national average home price increased 1.1% to $670,100. CREA forecasts a 6.6% increase in national home sales this year.
“The market remains on a recovery course with activity running above year ago levels, but the pace is generally sluggish and uneven,” Robert Hogue, Associate Chief Economist at RBC Economics, wrote in a report. “Buyers may be worried about making big financial decisions amid heightened economic uncertainty.”
“Broad balance” between supply and demand is keeping prices flat and that trend should continue in the coming months, Hogue said, citing January’s 0.1% increase from a year earlier in the national composite MLS home price, compared with December’s 0.1% decrease.
CREA said the sales-to-new listings ratio of 49.3%, compared with a long-term average of 55%, indicates “balanced housing market conditions.” The 4.2 months of inventory in January compares with readings in the high threes at the end of last year and a long-term average of 5 months.
