By Robb M. Stewart
OTTAWA--Canada's housing market continues to struggle, with sales and prices pulling back again in February and new supply erasing the growth notched in the first month of the year.
National sales of existing homes fell for a fourth straight month, declining 1.3% from the month before in February, the Canadian Real Estate Association said Tuesday. Sales for the month were 8.1% below year-earlier levels on an unadjusted basis.
Home resales have now retreated in five of the last six months and economists expect weakness could linger into spring, when activity traditionally picks up, given a recent downturn in the labor market and lingering worries about the economy.
"Pick your driver, whether it be a really bad winter this year which may have hammered the last few months, or uncertainty, or no population growth, or that the only folks who move at this time of year in this climate do so either because they must or they're masochists," said Derek Holt, head of capital markets economics at Bank of Nova Scotia.
The CREA said resale activity was slow nationally but particularly weak in the stretch of southern Ontario between Windsor and Toronto, where the housing market has struggled in recent months.
The number of new listings was down 3.9% between January and February, following a 7.3% increase in new properties on the market to begin the year.
The association said there were 151,850 properties listed for sale across real-estate systems at the end of February, up 3.7% from a year earlier but a little more than 12% below the long-term average for the time of year.
"February saw a continuation of the quieter levels of activity recorded in January, although there was some indication things were starting to pick up speed toward the end of the month," said Shaun Cathcart, CREA's senior economist.
The association's data indicated that benchmark house prices, calculated in a similar fashion to the S&P Cotality Case-Shiller National Home Price Index, slipped 0.6% from the prior month and were down 4.8% on the same month last year. Prices fell 0.6% month-over-month in January.
Cathcart said 2026 is still expected to reflect pent-up demand among first-time home buyers, though as prospective home owners have waited a long time for mortgage rates to hit bottom, some may hold off buying for a low point in prices in Ontario and British Columbia markets.
The Bank of Canada is set to decide on interest rates Wednesday. Policymakers, having twice in a row left the central bank's policy interest unchanged, are widely expected to again sit on the sidelines amid heightened uncertainty over trade and the possible effect on Canada's economy and inflation from the spike in oil prices amid the conflict in the Middle East.
The CREA said there was the equivalent of five months of housing inventory at the end of last month, unchanged from January and in line with the longer-term average for the measure. A seller's market is considered to be below 3.6 months of supply and a buyer's market above 6.4 months.
Michael Davenport, senior Canada economist at Oxford Economics, said a spring thaw for the market doesn't look likely given the deterioration in the job market, elevated trade policy and geopolitical uncertainty, and a population that is no longer growing after the federal government curbed once-booming immigration.
Davenport expects home prices will fall further before finding a bottom around mid-year, when modest job growth is anticipated and affordability should improve. Still, the pending renegotiation of the U.S.-Mexico-Canada Agreement on free trade clouds the outlook.
"Prospects for a sustained pickup in resale housing hinge on the successful renegotiation of the USMCA that lowers tariffs and lessens trade policy uncertainty, and an early resolution to the U.S./Israel-Iran war," the economist said.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
03-17-26 1117ET
