The headlines heralding a rebound in Canadian housing carry a familiar air of triumphalism.
August marked the fifth consecutive month of sales gains, edging national transactions 1.1 per cent higher on a seasonally adjusted basis and bringing cumulative activity since March to 12.5 per cent. It was the strongest August since 2021. Yet such framing obscures a more sobering reality.
Even after half a year of steady increases, sales remain well below long-term averages, as the Canadian Real Estate Association’s own chart illustrates below. The so-called resurgence is not a restoration of vitality by any means. It is just the slow crawl back to ordinary levels of activity after a period of deep contraction.
Supply’s ascendancy
If there is a true story in CREA’s August release, it is the rise of supply. New listings climbed 2.6 per cent month-over-month, more than double the pace of sales (refer to the chart by Valery below). Active listings stood 8.8 per cent higher than a year earlier, placing inventory squarely in line with historical norms. The sales-to-new listings ratio slipped to 51.2 per cent, beneath its long-term average of 54.9 per cent and a full point lower than in July. The balance has moved further in favour of supply.
These dynamics do not make for trivial ones. Policymakers and market participants alike must recognise that rising inventories alter the psychology of buyers and sellers. With more choice in the marketplace, prospective purchasers feel less urgency to transact, while vendors face greater competition. This is the mechanism by which price discovery bends downward, not upward, even in the face of incremental sales growth.
Prices under pressure
The price data reinforce this narrative of fragility. The national Home Price Index (HPI) was virtually unchanged in August, slipping 0.1 per cent from July and standing 3.4 per cent below its level a year earlier. The national average sale price rose 1.8 per cent year-over-year, but this was more a reflection of compositional shifts in where sales occurred than a substantive change in valuations. Benchmark prices remain largely flat since spring, a plateau that conceals persistent downward pressure in many local markets where supply is rising more rapidly than demand.
Months of inventory at 4.4 still sit slightly below the long-term average of five, a level that, in isolation, suggests modest seller leverage. Yet the trajectory tells a different story. New listings are climbing steadily, and with the seasonal surge of autumn supply we have witnessed, the leverage is already drifting toward buyers.
The policy lens
Much of the market’s trajectory in the coming months hinges on monetary policy. CREA’s economists openly speculated that a September rate cut could entice buyers off the sidelines. Yet such relief, if it arrives, will not erase the structural imbalance created by a surge in supply. Monetary easing may lubricate demand, but it cannot extinguish the additional competition sellers now face.
For governments, the lesson is sharper still. The surge of listings points toward the idea of strain. Investors under pressure from higher carrying costs, owners confronting mortgage renewal shocks, and developers actively working to clear unsold product all contribute to the current flow of listings onto the market. Urbanation recently reported that completed, developer-held condo inventory in the Greater Toronto Area reached a record high in Q2 2025. At the same time, STOREYS quoted major developers pointing to competitive pricing and incentive programs as necessary adaptations in the present market.
Policymakers should be wary of mistaking higher transaction counts for genuine affordability progress. A market that clears at lower prices due to stress-driven listings is a symptom of fragility, not a cure.
Outlook
The temptation to label August a turning point is strong. After years of volatility, Canadians are eager for signs of stability. Yet the evidence counsels caution. Sales are inching upward but remain subdued by historical standards. Listings are climbing more quickly than demand, shifting the balance of power toward buyers. Prices, meanwhile, are not rebounding; they are treading water under the weight of excess supply.
To call this a comeback is to misunderstand the mechanics of housing markets. Canada’s real estate sector is in a phase of recalibration, not resurgence, as some of my previous pieces allude to. Stakeholders who mistake volume for vitality risk misreading the very forces that will define the months ahead.
Daniel Foch is the Chief Real Estate Officer at Valery.ca, and Host of Canada’s #1 real estate podcast. As co-founder of The Habistat, the onboard data science platform for TRREB & Proptx, he helped the real estate industry to become more transparent, using real-time housing market data to inform decision making for key stakeholders. With over 15 years of experience in the real estate industry, Daniel has advised a broad spectrum of real estate market participants, from 3 levels of government to some of Canada’s largest developers.
Daniel is a trusted voice in the Canadian real estate market, regularly contributing to media outlets such as The Wall Street Journal, CBC, Bloomberg, and The Globe and Mail. His expertise and balanced insights have earned him a dedicated audience of over 100,000 real estate investors across multiple social media platforms, where he shares primary research and market analysis.
Thank you calling it out.