CREA Cuts 2025 Sales Forecast Again as Regional Splits Widen
A 47-year-old homeowner in Burlington refinanced in 2021 at 1.84%. She has no plans to sell. Her neighbor, who bought in 2023 at 6.1%, is listing this spring. That divergence, repeated across hundreds of thousands of households, is the mechanical reason the Canadian Real Estate Association keeps revising its 2025 forecast downward.
The association now projects national sales will reach roughly 470,000 units this year, down from the 500,000-plus figure it published in January. The Bank of Canada has cut its policy rate from a 5% peak to 4%, yet transaction volumes remain stuck. The explanation is not mysterious. The rate lag is real, and the composition of the market has shifted.
The locked-in effect matters more than the rate
Most forecasts treat housing as a single national market responding to a single interest rate. That framing breaks when one segment of homeowners holds legacy mortgages at 2% or 3% and another segment faces renewal at current rates. The first group will not sell unless forced. The second group is either delaying or absorbing higher carrying costs. The result is a market where new listings are rising but turnover of existing units remains suppressed.
Statistics Canada data show that months of inventory have climbed to 4.2 nationally, edging toward balanced-market territory. But that inventory is not uniformly distributed. Listings in the Greater Toronto Area and suburban Ontario markets like Brampton and Kitchener-Waterloo have surged as sellers who waited for "better times" compete against each other. Calgary and Edmonton, by contrast, continue to clear inventory quickly, with sales momentum driven by interprovincial migration and price points roughly 30% below Toronto.
CREA's forecast acknowledges this split explicitly. Ontario is expected to post a modest sales gain, but the increase will be offset by volume declines in previously overheated secondary markets where prices rose sharply in 2021-2022 and have since corrected. The national average obscures the underlying structure.
The mortgage renewal wall is not a metaphor
Roughly 1.2 million Canadian mortgages will renew in 2025 and 2026. Many of those borrowers locked in rates between 1.5% and 2.5% during the pandemic. The renewal shock, when a $400,000 mortgage moves from 2% to 5.5%, adds approximately $850 per month to carrying costs. That is not a rounding error. It is enough to sideline discretionary spending, delay a planned move-up purchase, or force a sale in cases where income has not kept pace.
The effect shows up in consumer sentiment data. The "fear of missing out" dynamic that characterized 2021 has been replaced by caution. Buyers are waiting for clarity on where rates will settle, and sellers are waiting for buyers to stop waiting. The result is a market where the headline average price, currently estimated at $705,000, is rising by less than 2% year-over-year despite falling rates.
Alberta and Saskatchewan are doing the work
The national forecast would look worse without the Prairie provinces. Alberta's market, in particular, is absorbing buyers who have been priced out of Toronto and Vancouver. A two-bedroom condo in downtown Calgary lists for roughly $350,000. The same unit in Toronto's core starts at $650,000. That gap is not narrowing, and it is pulling migration eastward in measurable volume.
Saskatchewan is seeing similar momentum, driven by a combination of affordability and employment stability in resource sectors. CREA's regional breakdown shows both provinces outperforming the national sales trend by double digits. The implication is that Canada's housing market is bifurcating along price and migration lines, not recovering uniformly.
The forecast will be revised again. The next revision will depend less on the Bank of Canada's rate path than on whether the locked-in cohort begins to unlock, and that cohort is responding to life events more than to policy rates.
A 47-year-old homeowner in Burlington refinanced in 2021 at 1.84%. She has no plans to sell. Her neighbor, who bought in 2023 at 6.1%, is listing this spring. That divergence, repeated across hundreds of thousands of households, is the mechanical reason the Canadian Real Estate Association keeps revising its 2025 forecast downward.
The association now projects national sales will reach roughly 470,000 units this year, down from the 500,000-plus figure it published in January. The Bank of Canada has cut its policy rate from a 5% peak to 4%, yet transaction volumes remain stuck. The explanation is not mysterious. The rate lag is real, and the composition of the market has shifted.
The locked-in effect matters more than the rate
Most forecasts treat housing as a single national market responding to a single interest rate. That framing breaks when one segment of homeowners holds legacy mortgages at 2% or 3% and another segment faces renewal at current rates. The first group will not sell unless forced. The second group is either delaying or absorbing higher carrying costs. The result is a market where new listings are rising but turnover of existing units remains suppressed.
Statistics Canada data show that months of inventory have climbed to 4.2 nationally, edging toward balanced-market territory. But that inventory is not uniformly distributed. Listings in the Greater Toronto Area and suburban Ontario markets like Brampton and Kitchener-Waterloo have surged as sellers who waited for "better times" compete against each other. Calgary and Edmonton, by contrast, continue to clear inventory quickly, with sales momentum driven by interprovincial migration and price points roughly 30% below Toronto.
CREA's forecast acknowledges this split explicitly. Ontario is expected to post a modest sales gain, but the increase will be offset by volume declines in previously overheated secondary markets where prices rose sharply in 2021-2022 and have since corrected. The national average obscures the underlying structure.
The mortgage renewal wall is not a metaphor
Roughly 1.2 million Canadian mortgages will renew in 2025 and 2026. Many of those borrowers locked in rates between 1.5% and 2.5% during the pandemic. The renewal shock, when a $400,000 mortgage moves from 2% to 5.5%, adds approximately $850 per month to carrying costs. That is not a rounding error. It is enough to sideline discretionary spending, delay a planned move-up purchase, or force a sale in cases where income has not kept pace.
The effect shows up in consumer sentiment data. The "fear of missing out" dynamic that characterized 2021 has been replaced by caution. Buyers are waiting for clarity on where rates will settle, and sellers are waiting for buyers to stop waiting. The result is a market where the headline average price, currently estimated at $705,000, is rising by less than 2% year-over-year despite falling rates.
Alberta and Saskatchewan are doing the work
The national forecast would look worse without the Prairie provinces. Alberta's market, in particular, is absorbing buyers who have been priced out of Toronto and Vancouver. A two-bedroom condo in downtown Calgary lists for roughly $350,000. The same unit in Toronto's core starts at $650,000. That gap is not narrowing, and it is pulling migration eastward in measurable volume.
Saskatchewan is seeing similar momentum, driven by a combination of affordability and employment stability in resource sectors. CREA's regional breakdown shows both provinces outperforming the national sales trend by double digits. The implication is that Canada's housing market is bifurcating along price and migration lines, not recovering uniformly.
The forecast will be revised again. The next revision will depend less on the Bank of Canada's rate path than on whether the locked-in cohort begins to unlock, and that cohort is responding to life events more than to policy rates.
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