The threat of a trade war and the impact from U.S. tariffs are affecting existing home sales, and the association representing Canada's Realtors said the decline began the minute United States President Donald Trump took office.
The Ottawa-based Canadian Real Estate Association said sales for all housing classes including condo apartments and townhouses in February dropped 10.4% from a year ago and 9.8% from a month earlier.
The decline in existing home sales comes as new home construction also declined, according to Canada Mortgage and Housing Corp. The seasonally adjusted annualized rate for housing starts for all areas in Canada decreased by 4% in February to 229,030 units compared to 239,322 units in January.
Within hours of his inauguration in January, President Trump said he planned to impose 25% tariffs on Canada and Mexico by Feb. 1, although they were delayed by a little more a month. In the past several weeks, the tariff war has heated up further with both countries threatening action and imposing punitive measures. The battle also has influenced the Bank of Canada's decision-making.
"The moment tariffs were first announced on January 20, a gap opened between home sales recorded this year and last. This trend continued to widen throughout February, leading to a significant, but hardly surprising, drop in monthly activity," said the Association's Senior Economist and Director of Housing Data and Market Analysis Shaun Cathcart, in a commentary. "This is already being reflected in renewed price softness, particularly in Ontario's Greater Golden Horseshoe region."
Last week Trump doubled down on his rhetoric that the United States has been helping the Canadian economy. "But why should we subsidize another country for $200 billion?" Trump said at meeting with reporters at the White House in Washington, D.C. "And again, we don’t need their lumber, we don’t need their energy. We have more than they do. We don’t need anything. We don’t need their cars. I’d much rather make the cars here."
That talk, the Canadian Real Estate Association said has reverberated in the housing market. Sales across Canada were at their lowest level since November 2023, and they fell in about three-quarters of all local markets and in almost all large markets, according to CREA.
The number of new for-sale listings also dropped 12.7% month-over-month. There were 146,250 properties listed for sale across the country at the end of February, up 13.1% from a year earlier but still below the long-term average for that time of the year of around 174,000 listings.
"The uncertainty of the last few weeks seems to be causing some buyers to think twice about big financial decisions right now," said James Mabey, chair of CREA, in a commentary.
The actual national average sale price fell 3.3% in February compared to the same month last year.