Toronto home sales rose in January, but tariff threat could curb housing market in 2025

In January 2025, the Greater Toronto Area (GTA) experienced a notable increase in home sales, with a 10% rise from December, totaling 5,971 units. This uptick followed a significant 18.2% decline in December 2024. However, when compared to January 2024, sales were still down by 10.7%.

The surge in sales was accompanied by a 26% increase in new listings from December and a substantial 48.6% rise compared to the same month last year. Despite these positive trends, the home price index remained relatively stable, standing at C$1,089,300, showing a slight 0.7% increase from January 2024.

The Bank of Canada's decision to lower its benchmark interest rate by a quarter of a percentage point to 3% in January is expected to support the housing market. Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board (TRREB), noted that lower borrowing costs could encourage more homebuyers as the spring market approaches, potentially leading to increased transactions and a moderate rise in average selling prices throughout 2025.

However, potential trade disruptions pose a risk to this positive outlook. Such disruptions could negatively impact the economy and consumer confidence, possibly offsetting the benefits of lower mortgage rates. While specific details about the nature of these trade issues were not provided, their potential to affect the housing market is a concern for industry observers.

Looking ahead, TRREB forecasts a 12.4% increase in home sales and a 2.6% rise in the average selling price for 2025 compared to 2024. These projections are based on current market conditions and the anticipated effects of lower interest rates. However, unforeseen economic factors, such as trade disruptions, could influence these outcomes.

In summary, while the GTA's housing market showed signs of recovery in January 2025, external factors like potential trade issues could pose challenges. Stakeholders are advised to monitor these developments closely as the year progresses.