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TORONTO, May 9 — Canada’s housing market is buckling under the strain of economic uncertainty driven by U.S. President Donald Trump’s trade war, according to a new report by the Royal Bank of Canada. The resulting buyer hesitation has triggered steep declines in home resales, particularly in southern Ontario and British Columbia.
“The trade war is taking an increasing toll on Canada’s housing markets as potential economic fallout weighs heavily on the minds of prospective homebuyers,” said RBC economist Robert Hogue. He noted that despite favorable borrowing conditions, psychological uncertainty is keeping many Canadians on the sidelines.
According to the MLS Home Price Index, home prices are falling while unsold inventories continue to rise — a combination that has shifted market power to buyers. Toronto, Vancouver, and the Fraser Valley are experiencing significant drops in resales, with Toronto seeing an 8.1% rise in new listings but a sharp 23.3% drop in actual sales. In Calgary, listings rose by 15.7% while sales fell by 22.3%. The Fraser Valley recorded the steepest decline in home sales at 29.1%.
In contrast, markets such as Edmonton, Saskatoon, Regina, and some parts of Quebec and Atlantic Canada have remained more stable — though economists caution they may not remain immune for long.
RBC’s report indicated April sales in Toronto were the weakest in three decades, excluding the 2020 pandemic lockdown. Calgary, once considered resilient, also posted its first annual home price drop in five years.
The chill in the market is widely attributed to economic anxiety linked to Trump’s aggressive trade policies. “The buyer hesitation we’re currently seeing is largely psychological,” said Penelope Graham, mortgage expert at Ratehub.ca. “People are afraid their jobs might be affected and are reluctant to take on large financial commitments.”
Clay Jarvis, a mortgage analyst at NerdWallet Canada, noted that trade tensions are “clogging the market’s arteries,” affecting not only residential but also commercial real estate. “You’re not going to expand your rental portfolio if you fear a collapsing job market,” he said.
Still, analysts say the current climate offers some opportunities — particularly for buyers. Those with secure employment and healthy down payments could benefit from less competition, more room for negotiation, and relatively low mortgage rates. Graham recommends securing a pre-approval and rate hold as soon as possible.
Sellers, however, face stiffer headwinds. With inventory building up, competition is fierce, and expectations must be adjusted. “The record-breaking sales of the pandemic years are behind us,” Graham said. “Pricing realistically and preparing for longer listing times is key in today’s market.”
The report signals that while the full economic impact of the trade war is still unfolding, its chilling effect on Canada’s housing market is already clear — and worsening.
