Canadian Home Prices Rise Despite Surging Inventory and Slowing Demand

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In January 2025, Canadian real estate experienced a notable price increase, with the composite benchmark home price rising by 0.5% (approximately $3,600) to $709,200. This uptick marked the first annual growth in nearly a year, positioning prices at their highest since September 2024. However, it's important to note that current prices remain 16.8% (or $142,800) below the peak observed in March 2022.

The price surge occurred despite a significant increase in housing inventory. The Canadian Real Estate Association (CREA) reported 26,650 home sales in January, a 2.9% rise from the previous year. In contrast, new listings grew by 22.7% to 65,054 during the same period, indicating that the supply of homes outpaced demand. This imbalance led to a decline in the sales-to-new-listings ratio (SNLR) to 40.9%, the lowest since 2019, suggesting a shift towards a buyer's market. 

The unexpected price increase, amid growing inventory and a weakening demand balance, is largely attributed to policymakers injecting substantial stimulus and expanding credit availability in recent months. This approach has raised concerns, with warnings that such measures could undermine housing affordability.

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