If you’ve noticed more "For Sale" signs popping up in your neighborhood lately, you’re not alone. January saw a surge in new listings across Canada, and according to the Canadian Real Estate Association (CREA), the looming threat of tariffs played a major role in that shift.

New supply jumped 11% from December to January—the biggest monthly increase (outside of COVID-19 impacts) since the late 1980s. Year-over-year, listings rose 12.7%, bringing the total number of homes on the market to 136,000. While that’s a healthy boost, it’s still below the long-term average of 160,000 for this time of year.

Meanwhile, home sales dropped 3.3% month-over-month, with most of that decline happening in the last week of January—right before the U.S. and Canada agreed to delay the implementation of tariffs. But any sigh of relief was short-lived.

The Tariff Factor: What It Means for Real Estate

On March 12, U.S. President Donald Trump signed executive orders imposing a 25% tariff on all steel and aluminum imports, including those from Canada. On top of that, a 25% tariff on all Canadian imports—including lumber—is set to take effect on March 4, along with a 10% tariff on Canadian oil.

The potential trade war between the U.S. and Canada isn’t just political—it’s economic, and the real estate sector is in the crosshairs. These tariffs could lead to higher construction costs, further slowing new home development at a time when Canada’s housing supply is already under pressure. If costs go up, expect new home prices to follow.

At a press conference in Montreal, Prime Minister Justin Trudeau reassured Canadians that the government is working to prevent these tariffs from taking effect. “If ever there are tariffs brought in Canada, our response will be immediate and strong, but we don’t want that. We are going to do the work to make sure they don’t come on,” he said.

A Market in Transition

So, how does this all play out in the real estate market?

CREA’s Senior Economist, Shaun Cathcart, points to two key trends: a significant influx of new listings and a slowdown in sales—especially in B.C. and Ontario. “The timing of that change in demand leaves little doubt as to the cause—uncertainty around tariffs,” he said. As a result, markets that had been gradually tightening since last fall are suddenly seeing softer pricing conditions again.

On a year-over-year basis, home sales in January were up 2.9%, while the national average price nudged up 1.1% to $670,064. But with sales dipping and inventory rising, Canada’s sales-to-new-listings ratio now sits at 49.3%—a clear shift from the mid-to-high 50s we saw at the end of 2024. That puts us firmly in balanced market territory.

What to Expect Moving Forward

Looking ahead, the spring market is still expected to pick up, but uncertainty around trade and economic conditions could keep some buyers on the sidelines.

“A trade war with our largest trading partner is a major dark cloud on the horizon,” said CREA Chair James Mabey. “While some buyers may hold off due to economic uncertainty, a softer pricing environment and lower interest rates could present opportunities for others.”

For buyers, this could mean a window to negotiate better deals in certain markets. For sellers, understanding local market dynamics will be crucial. If you’re thinking of making a move, let’s chat—I can help you navigate these changing conditions.

If you're navigating this dynamic market, whether buying or selling, let's talk strategy. Our team can guide you through the most efficient processes, aiming to save you time, money, and hassle. Contact us today, and let's make your real estate journey successful!

Source: RE/MAX.ca