Residential Market Commentary - Winter Wallop for January Market

The country’s housing market was stone cold in January and the Canadian Real Estate Association is blaming the weather – or at least the weather in parts of southern Ontario. Record setting snowfalls and ferociously cold temperatures appear to have kept house hunters indoors.

Seasonally adjusted sales were down nearly 6.0% in January compared to December. Still, more than 22,500 properties changed hands. The national average sales price slipped 2.6% compared to a year earlier.

CREA is not letting the weather cool its expectations for 2026 though. The Association is forecasting 5.1% sales growth and 2.8% price growth in 2026, driven by pent-up demand and a pent-up desire to sell. That desire to sell may be showing itself. New listings rose more than 7.0%, tipping the market further in favour of buyers.

There is a feeling among some realtors that, while the weather may have been a factor in January, the slump is a hold-over from the end of 2025. They say buyers, especially first-timers, are waiting for greater improvements in affordability through further price reductions and, perhaps, lower interest rates.

The latest inflation numbers suggest there may be some merit in that thinking. Statistics Canada reports headline inflation dipped to 2.3% in January, down from 2.4% in December. Most of the decline came from falling gasoline prices, but shelter inflation continues to slow as well. It dropped below 2.0% for the first time in five years.  Hopes for lower interest rates seem more remote though. The Bank of Canada has been clear, it will not be moving rates unless there are very strong reasons to do so.