Canadian housing supply has largest rate of increase in three decades

Canada’s housing shortage crisis eased dramatically in January with a double-digit jump in active listings over December, according to a report released this week by the Canadian Real Estate Association (CREA). 

The jump in supply month-over-month was 11%, the largest seasonally adjusted monthly increase in new supply on record going back to the late 1980s. 

There were 4.2 months of inventory nationally at the end of January, up from readings in the high threes in October, November, and December.  

According to CREA, the long-term average is five months of inventory, approaching buyers' market territory. A seller’s market is below 3.6 months and a buyer’s market is above 6.5 months 

The report also said sales on MLS Systems across the country dropped at the end of last month by 3.3% from December, due to uncertainty over the pending trade war with the United States.  

“The standout trends to begin the year were a big jump in new supply at an uncommon time of year, as well as a weakening in sales which only showed up around the last week of January,” said Shaun Cathcart, CREA’s senior economist.

“The timing of that change in demand leaves little doubt as to the cause, which is uncertainty around tariffs. Together with higher supply, this means markets that had been steadily tightening up since last fall are now suddenly in a softer pricing situation again, particularly in British Columbia and Ontario.” 

The drop in sales, coupled with the increase in supply, took the national sales-to-new listings ratio down to 49.3% compared to ratios in the mid-to-high 50s in the fourth quarter of last year.  

“The long-term average for the national sales-to-new listings ratio is 55%, with readings between 45% and 65% generally consistent with balanced housing market conditions,” said Cathcart.  

The number of homes listed for sale at the end of January was 136,000, an increase of 12.7% from January 2024, but still below the long-term average for that time of the year of around 160,000 listings, according to CREA. 

The national composite home price index was static in January, as a result of continuing softness in BC and Ontario, offset by rising prices on the Prairies, in Quebec and across the East Coast. 

The non-seasonally adjusted national average home price was $670,064 in January 2025, up 1.1% from January 2024. 

CREA’s forecast for 2025, released last month, called for a busy spring selling season, which has been tempered by Canada/US trade relations. 

“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,” said James Mabey, CREA chair. “While uncertainty about the economy and jobs will no doubt keep some prospective buyers on the sidelines, a softer pricing environment alongside lower interest rates will be an opportunity for others.”