Canada’s housing market may see a mild rebound in the second half of 2025, according to a report released Wednesday by TD Economics.
The report, written by economist Rishi Sondhi, says home sales are expected to pick up after a slow start to the year. National home sales rose four per cent in May, following a small increase in April, suggesting some demand is returning.
“Uncertainty remains elevated, and job markets are deteriorating,” the report says. “Even if sales levels improve, they are likely to remain subdued, particularly in B.C. and Ontario.”
TD has slightly raised its forecast for average home prices in the second half of the year, but only in areas outside British Columbia and Ontario. Stronger sales and tighter supply in those regions, especially the Prairies, are expected to support prices.
Outlook varies by region
In B.C. and Ontario, prices are expected to fall. The report says there are too many homes for sale compared to the number of buyers in those provinces.
However, Ontario could still see a small bump in average prices if more expensive homes make up a larger share of sales. The report points to weak demand for cheaper condos in the Greater Toronto Area, especially among investors.
Looking ahead to 2026, TD expects both home sales and prices to grow more strongly, thanks to a better economy and lower borrowing costs. But high prices in places like B.C. and Ontario, along with slower population growth, are likely to limit how much the market can bounce back.
The report says the federal government’s housing plan could help by boosting supply, but not right away.
“We wouldn’t expect a material boost to housing completions until perhaps late next year,” it says.
TD says any major improvement in housing affordability will take time and will depend on building more homes across the country.
