Canada's housing market began 2026 with a pronounced downturn, as national home sales experienced a substantial decline in January according to the latest figures from the Canadian Real Estate Association (CREA). The data reveals a concerning trend that has particularly impacted Ontario's real estate landscape.
National Market Performance
January witnessed a 5.8 percent month-over-month decrease in seasonally adjusted home sales across Canada. More strikingly, actual transactions without seasonal adjustments plunged 16.2 percent compared to January 2025. This significant year-over-year decline indicates broader market challenges beyond typical seasonal patterns.
Supply and Demand Dynamics
While sales decreased, new listings increased by 7.3 percent, creating a widening gap between available properties and buyer demand. The national sales-to-new-listings ratio dropped to 45 percent, down from 51.3 percent in December and well below the long-term average of 54.8 percent. Months of inventory rose to 4.9 from 4.6, approaching the five-month threshold typically associated with a balanced market.
Price Movements and Regional Variations
Price metrics showed relative stability despite the sales decline. The national MLS Home Price Index decreased 0.9 percent month-over-month and 4.9 percent year-over-year. The average sale price fell 2.6 percent year-over-year to $652,941. Price weakness remained concentrated in Ontario, while several smaller markets posted modest year-over-year gains.
Ontario's Significant Decline
Ontario experienced the most dramatic sales decreases, continuing a trend that began in early 2025 according to CREA senior economist Shaun Cathcart. Greater Toronto sales declined nearly 10 percent month-over-month, while provincial dollar volume fell 10.2 percent on the month and 22 percent from a year earlier. Several Southwestern Ontario markets, including Hamilton–Burlington and Kitchener–Waterloo, also saw sharp sales reductions.
Weather-Related Disruptions
CREA attributed much of Ontario's weakness to severe winter storms that limited real estate activity across the province in January. "The monthly decline in national home sales was driven primarily by less activity in the Greater Golden Horseshoe and Southwestern Ontario, suggesting that the story was probably more about a historic winter storm than a downshift in demand," explained Cathcart.
Regional Resilience
While Central Canada struggled, other regions demonstrated more resilience. Calgary posted a 3.0 percent month-over-month increase in seasonally-adjusted sales, while Regina saw a substantial 9.4 percent gain. The Ottawa market remained relatively unchanged, and Montreal experienced only a modest 0.5 percent decline.
Market Implications
The January data suggests Canada's housing market faces complex challenges as it enters 2026. The combination of weather disruptions, regional variations, and ongoing price adjustments creates an uncertain landscape for buyers, sellers, and industry professionals. The significant gap between declining sales and increasing listings indicates potential for continued price pressure in certain markets, particularly Ontario.
