The Toronto housing market closed out 2025 on a subdued note, with both sales and prices declining in December, cementing a year defined by cautious buyers and economic headwinds stemming from trade friction with the United States.
A Year-End Slowdown Caps a Tepid Year
Seasonally adjusted data released by the Toronto Regional Real Estate Board showed a 0.4 per cent dip in home sales in December compared to November. The benchmark price for a home also softened, slipping 0.7 per cent to $962,000. This quiet finish was emblematic of the entire year's trend.
For 2025 as a whole, the numbers were more stark. Total sales plunged 11.2 per cent compared to 2024 levels. On the price front, the benchmark experienced a cumulative decline of 6.3 per cent over the course of the year, according to the board's figures.
Economic Uncertainty Overshadows Lower Rates
This downturn occurred despite market conditions that traditionally might spur activity. Buyers were presented with lower interest rates and a greater selection of properties, as new listings jumped 5.5 per cent in December from the month prior. However, these factors failed to draw significant numbers back into the market.
The primary dampener, as cited in the report, was broader economic uncertainty. Trade tensions initiated by U.S. President Donald Trump, including tariffs on Canadian goods and threats of more, suppressed national economic growth. This climate of instability made both businesses and consumers hesitant to commit to major investments like real estate.
Looking Ahead: Stability is Key for Recovery
The outlook suggests this period of hesitation may continue. Market observers believe certainty will remain elusive until Canada and the U.S. renegotiate their trade deal, expected sometime this year, and until economic stimulus plans from Prime Minister Mark Carney begin to show results.
Jason Mercer, the Toronto Real Estate Board's Chief Information Officer, emphasized the need for confidence. "Reaffirmed trade relationships and large-scale domestic economic development projects will be key for improved home sales moving forward," Mercer stated. "Households must be confident in their employment situation before committing to long-term monthly mortgage payments, even in this more affordable market."
The data paints a clear picture of a market in a holding pattern, where macroeconomic concerns have overridden local factors like inventory and borrowing costs, leaving Toronto's real estate sector awaiting a return of buyer confidence.
