Canada's Housing Market Splits into Two Distinct Geographies
A new analysis from National Bank of Canada Capital Markets reveals that Canada's housing market has effectively divided into two separate geographic realities. According to their latest Housing Market Monitor report, approximately half of the country is experiencing declining sales and prices while the other half continues to see climbing sales activity.
The Declining Western and Central Markets
British Columbia, Ontario, and Alberta represent the portion of Canada's housing market currently facing significant challenges. These provinces have experienced measurable declines in both prices and sales volumes while simultaneously seeing increases in housing supply. The Teranet-National Bank Housing Price Index illustrates this trend clearly, showing that Toronto experienced a nearly eight percent decline in housing prices during 2024 alone.
While Alberta faces somewhat different affordability challenges compared to British Columbia and Ontario, all three provinces share a concerning demographic trend. Alberta has experienced the most profound decline in population growth among all Canadian provinces, a critical factor since population expansion typically serves as a major driver of housing demand.
The Resilient Eastern and Prairie Markets
In contrast, Manitoba, Quebec, and Saskatchewan have demonstrated remarkable resilience in their housing markets. These provinces have recorded climbing sales that represent their highest levels since 2021. Additionally, Atlantic Canada has shown strength, with New Brunswick, Newfoundland, and Prince Edward Island experiencing their strongest year for sales in 2025 since 2022.
December Signals Potential Shift
The National Bank report indicates that December may have marked the beginning of a broader trend toward declining activity across multiple provinces. Seven of Canada's ten provinces recorded falling year-over-year sales during that month. Only Prince Edward Island, Nova Scotia, and New Brunswick maintained positive year-over-year sales growth in December.
National Inventory and Construction Trends
At the national level, housing inventory edged upward slightly in December to 4.5 months of supply, compared to a holding pattern of 4.4 months during the previous four months. Despite market divisions, construction activity remained robust throughout 2025, with approximately 259,000 housing starts representing a nearly six percent increase from the previous year. This made 2025 the third strongest year for housing starts on record, trailing only 2021 and 2022.
The National Bank analysis underscores how regional economic factors, population dynamics, and local market conditions have created a bifurcated housing landscape across Canada, with distinct challenges and opportunities emerging in different geographic regions.
