Montreal Home Sales Drop 13% While Prices Climb: What Rebalancing Actually Means for Buyers and Sellers
The number of homes changing hands tells you something about velocity. The number on the sales contract tells you something about power. In Montreal last month, those two numbers moved in opposite directions.
Sales volume dropped 13% year-over-year in August, according to the Association professionnelle des courtiers immobiliers du Québec. At the same time, median prices climbed across all three major categories, with single-family homes up 3%, condominiums up 4%, and plexes up 2% from the previous year. The real estate board calls this a "rebalancing," which is accurate only if you understand what balance actually meant before.
Why Fewer Transactions Still Drive Prices Higher
The conventional explanation would be that fewer buyers means downward pressure on prices. That held true in most recessions. It does not hold when the supply side is locked.
A large percentage of Montreal homeowners refinanced between 2020 and 2022 at rates near 2%. Those owners are not listing. They cannot replace their current borrowing cost without taking a significant financial loss, even if they sell for more than they paid. The result is a market where the homes available for sale remain scarce despite weakening demand. Scarcity keeps prices elevated even when the buyer pool shrinks.
Active listings rose 18% compared to last year, but the baseline was the lowest inventory level the city had seen in decades. Adding 18% to an artificially suppressed number does not produce abundance. It produces slightly less scarcity. Buyers now see three or four options instead of one. Sellers still receive multiple offers on well-priced properties, especially for single-family homes in the inner suburbs.
The Divergence Between Categories
In August, median prices for both single-family homes and condominiums posted year-over-year gains of 3% and 4% respectively. Families with two working adults and access to parental down payment assistance can still compete for detached houses in Laval, Longueuil, and the outer edges of the Island. First-time buyers without family wealth are being pushed almost entirely into the condo market, where inventory is higher but unit sizes have shrunk and condo fees have climbed faster than wages.
The plex market presents a third dynamic. Quebec's recent regulatory adjustments to tenant rights and municipal right-of-first-refusal rules have added friction for small-scale investors. Buyers who would have purchased a duplex or triplex as a wealth-building vehicle are now calculating whether the added compliance cost justifies the acquisition. Prices are still rising in this segment, but the rate of appreciation has decelerated compared to single-family.
What Rebalancing Predicts About the Next Six Months
A balanced market, in technical terms, means neither buyers nor sellers hold systematic leverage. Montreal is not there yet. The market has moved from extreme seller advantage to moderate seller advantage. That distinction matters for anyone trying to time a purchase or sale.
The Bank of Canada has held its policy rate at 2.25% throughout 2026, after completing its cutting cycle in late 2025, and mortgage rates have remained relatively stable. Buyers who waited for further affordability improvements have found that prices continued to rise even without additional rate relief. The market has adjusted to the current rate environment, with modest price increases persisting despite softer transaction volumes.
For sellers, the 13% drop in transaction volume signals that pricing strategy now matters. Overpricing a listing by 5% no longer results in a bidding war that closes above ask. It results in the property sitting for weeks, followed by a price cut that signals desperation. Well-priced homes still move faster than the market average, though selling times have lengthened across the board.
The deeper implication is a recalibration to a new equilibrium where fewer people can afford to transact, but those who can are still paying more than last year. The market is stratifying: some neighborhoods and property types have entered a genuine buyers' phase, while others remain dominated by sellers who will not move at current rates. The split is widening, not closing.
The number of homes changing hands tells you something about velocity. The number on the sales contract tells you something about power. In Montreal last month, those two numbers moved in opposite directions.
Sales volume dropped 13% year-over-year in August, according to the Association professionnelle des courtiers immobiliers du Québec. At the same time, median prices climbed across all three major categories, with single-family homes up 3%, condominiums up 4%, and plexes up 2% from the previous year. The real estate board calls this a "rebalancing," which is accurate only if you understand what balance actually meant before.
Why Fewer Transactions Still Drive Prices Higher
The conventional explanation would be that fewer buyers means downward pressure on prices. That held true in most recessions. It does not hold when the supply side is locked.
A large percentage of Montreal homeowners refinanced between 2020 and 2022 at rates near 2%. Those owners are not listing. They cannot replace their current borrowing cost without taking a significant financial loss, even if they sell for more than they paid. The result is a market where the homes available for sale remain scarce despite weakening demand. Scarcity keeps prices elevated even when the buyer pool shrinks.
Active listings rose 18% compared to last year, but the baseline was the lowest inventory level the city had seen in decades. Adding 18% to an artificially suppressed number does not produce abundance. It produces slightly less scarcity. Buyers now see three or four options instead of one. Sellers still receive multiple offers on well-priced properties, especially for single-family homes in the inner suburbs.
The Divergence Between Categories
In August, median prices for both single-family homes and condominiums posted year-over-year gains of 3% and 4% respectively. Families with two working adults and access to parental down payment assistance can still compete for detached houses in Laval, Longueuil, and the outer edges of the Island. First-time buyers without family wealth are being pushed almost entirely into the condo market, where inventory is higher but unit sizes have shrunk and condo fees have climbed faster than wages.
The plex market presents a third dynamic. Quebec's recent regulatory adjustments to tenant rights and municipal right-of-first-refusal rules have added friction for small-scale investors. Buyers who would have purchased a duplex or triplex as a wealth-building vehicle are now calculating whether the added compliance cost justifies the acquisition. Prices are still rising in this segment, but the rate of appreciation has decelerated compared to single-family.
What Rebalancing Predicts About the Next Six Months
A balanced market, in technical terms, means neither buyers nor sellers hold systematic leverage. Montreal is not there yet. The market has moved from extreme seller advantage to moderate seller advantage. That distinction matters for anyone trying to time a purchase or sale.
The Bank of Canada has held its policy rate at 2.25% throughout 2026, after completing its cutting cycle in late 2025, and mortgage rates have remained relatively stable. Buyers who waited for further affordability improvements have found that prices continued to rise even without additional rate relief. The market has adjusted to the current rate environment, with modest price increases persisting despite softer transaction volumes.
For sellers, the 13% drop in transaction volume signals that pricing strategy now matters. Overpricing a listing by 5% no longer results in a bidding war that closes above ask. It results in the property sitting for weeks, followed by a price cut that signals desperation. Well-priced homes still move faster than the market average, though selling times have lengthened across the board.
The deeper implication is a recalibration to a new equilibrium where fewer people can afford to transact, but those who can are still paying more than last year. The market is stratifying: some neighborhoods and property types have entered a genuine buyers' phase, while others remain dominated by sellers who will not move at current rates. The split is widening, not closing.
Sources
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