Tariff fallout is scaring Canadians away from the housing market

Canadian homebuyers are stepping back from the market as trade tensions with the U.S. create economic uncertainty. The Canadian Real Estate Association (CREA) reports that home sales in March 2025 dropped to their lowest level for the month since 2009, with a 4.8% decline from February and a 9.3% decrease compared to the previous year. CREA's senior economist, Shaun Cathcart, attributes this downturn largely to uncertainty over tariffs, particularly from the U.S. ​

The U.S. has imposed significant tariffs on Canadian goods, including a 25% tariff on steel and aluminum exports. In response, Canada announced equivalent tariffs on $29.8 billion worth of U.S. goods. These measures have disrupted trade flows and weakened business confidence, prompting the Bank of Canada to reduce its key interest rate by 25 basis points to 2.75% in March 2025, marking the seventh consecutive rate cut since mid-2024. ​

Despite the rate cuts, consumer confidence remains low. The Conference Board of Canada's Index of Consumer Confidence fell for the third consecutive month in October 2023, dropping to 58.2. Canadians' outlooks on their current and future finances have become more pessimistic, with a majority viewing now as a bad time for major purchases. ​

In Ontario, home sales have been particularly affected, falling for the fifth straight month in October 2023 to reach the lowest levels since the Great Financial Crisis, excluding the pandemic shutdown. Nearly half of local centres, including the Greater Toronto Area, Hamilton, and Niagara, are now in a buyer’s market, bringing prices down. ​

The affordability crisis is also prompting many Canadians to consider relocating. A poll conducted by the Angus Reid Institute in July 2024 found that nearly 40% of recent immigrants to Canada are considering moving to another province or leaving the country altogether due to a lack of housing affordability. Most of these individuals reside in Ontario or British Columbia, where high housing costs have persisted. ​

As trade tensions continue to impact the economy, the Canadian housing market faces ongoing challenges. While some buyers may see opportunities in a softer pricing environment, the broader uncertainty is causing many to delay major financial decisions, further cooling the market.​